Download pdf - TASK FORCE MEMBERS U.S.-Latin America · TASK FORCE MEMBERS The Council sponsors an Independent Task Force when an issue of critical importance to U.S. foreign policy arises, and

TASK FORCE MEMBERS

The Council sponsors an Independent Task Force when an issue of critical importance to U.S. foreign policy arises, and it seems that a group diverse in backgrounds and perspectives may nonetheless be able to reach a meaningful consensus on policy through private and nonpartisan deliberations. Task Force members are asked to join a consensus signifying that they endorse “the general policy thrust and judgments reached by the group, though not necessarily every fi nding and recommendation.” Individual views and dissents that sharpen differences of analysis and pre-scription are also encouraged. Once formed, Task Forces are independent. Upon reaching a con-clusion, a Task Force issues a report, which the Council publishes and posts on its website. Task Force chairs, directors, and members are solely responsible for the content of their reports.

Charlene Barshefsky and James T. HillChairs

Shannon K. O’NeilProject Director

U.S.-Latin America

Relations:

A New Direction

for a New Reality

INDEPENDENT TASK FORCE REPORT No. 60

U.S.-Latin

Americ

a Relation

s: A New

Direc

tion

for a N

ew Reality

Charlene BarshefskyWilmer Cutler Pickering Hale and Dorr LLP

R. Rand BeersNational Security Network

Alberto R. Coll DePaul University College of Law

Margaret E. CrahanSt. Edward’s University

Jose W. FernandezLatham & Watkins LLP

Francis FukuyamaJohns Hopkins University

Peter HakimInter-American Dialogue

James A. HarmonHarmon & Co.

John G. HeimannFinancial Stability Institute

James T. HillThe JT Hill Group, Inc.

Donna HrinakKraft Foods Inc.

James V. KimseyAmerica Online, Inc.

Jim KolbeGerman Marshall Fund of the United States

Kellie MeimanMcLarty Associates

Shannon K. O’NeilCouncil on Foreign Relations

María OteroACCION International

Arturo C. PorzecanskiAmerican University

David J. RothkopfGarten Rothkopf

Julia E. SweigCouncil on Foreign Relations

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U.S.-Latin America

Relations:

A New Direction for a

New Reality

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U.S.-Latin America

Relations:

A New Direction for a

New Reality

Report of anIndependent Task Force

Sponsored by the Council on Foreign Relations

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The Council on Foreign Relations is an independent, nonpartisan membership organization,think tank, and publisher dedicated to being a resource for its members, government officials,business executives, journalists, educators and students, civic and religious leaders, and otherinterested citizens in order to help them better understand the world and the foreign policychoices facing the United States and other countries. Founded in 1921, the Council takes noinstitutional positions on matters of policy. The Council carries out its mission by maintaining adiversemembership;conveningmeetings; supportingaStudiesProgramthat fosters independentresearch; publishing Foreign Affairs, the preeminent journal on international affairs and U.S.foreign policy; sponsoring Independent Task Forces; and providing up-to-date informationand analysis about world events and American foreign policy on its website, CFR.org.

THE COUNCIL TAKES NO INSTITUTIONAL POSITION ON POLICY ISSUESANDHASNOAFFILIATIONWITHTHEU.S.GOVERNMENT.ALLSTATEMENTSOF FACT AND EXPRESSIONS OF OPINION CONTAINED IN ITS PUBLICA-TIONS ARE THE SOLE RESPONSIBILITY OF THE AUTHOR OR AUTHORS.

The Council sponsors an Independent Task Force when an issue of critical importance toU.S. foreign policy arises, and it seems that a group diverse in backgrounds and perspectivesmay nonetheless be able to reach a meaningful consensus on policy through private andnonpartisan deliberations. Task Force members are asked to join a consensus signifying thatthey endorse ‘‘the general policy thrust and judgments reached by the group, though notnecessarily every finding and recommendation.’’ Individual views and dissents that sharpendifferences of analysis and prescription are also encouraged. Once formed, Task Forces areindependent. Upon reaching a conclusion, a Task Force issues a report, which the Councilpublishes and posts on its website. Task Force chairs, directors, and members are solelyresponsible for the content of their reports.

For further information about the Council or this Task Force, please write to the Councilon Foreign Relations, 58 East 68th Street, New York, NY 10065, or call the Director ofCommunications at 212-434-9400. Visit the Council’s website at CFR.org.

Copyright © 2008 by the Council on Foreign Relations�, Inc.All rights reserved.Printed in the United States of America.

This report may not be reproduced in whole or in part, in any form beyond the reproductionpermitted by Sections 107 and 108 of the U.S. Copyright Law Act (17 U.S.C. Sections 107and 108) and excerpts by reviewers for the public press, without express written permissionfrom the Council on Foreign Relations. For information, write to the Publications Office,Council on Foreign Relations, 58 East 68th Street, New York, NY 10065.

This report is printed on paper that is certified by SmartWood to the standards of the ForestStewardship Council, which promotes environmentally responsible, socially beneficial, andeconomically viable management of the world’s forests.

Cert no. SW-COC-1530

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Task Force Chairs

Charlene Barshefsky

James T. Hill

Project Director

Shannon K. O’Neil

Senior Adviser

Julia E. Sweig

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Task Force Members

Charlene Barshefsky Donna Hrinak

R. Rand Beers James V. Kimsey

Alberto R. Coll Jim Kolbe

Margaret E. Crahan Kellie Meiman

Jose W. Fernandez Shannon K. O’Neil

Francis Fukuyama Marıa Otero

Peter Hakim* Arturo C. Porzecanski

James A. Harmon David J. Rothkopf

John G. Heimann Julia E. Sweig

James T. Hill

*The individual has endorsed the report and submitted an additional view.

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Contents

Foreword xi

Acknowledgments xiii

Maps xvi

List of Acronyms xix

Task Force Report 1

Executive Summary 3

Introduction 5

Poverty and Inequality 13

Public Security 25

Integration through Migration 39

Energy 49

Recommendations 57

Additional View 75

Task Force Members 77

Task Force Observers 85

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Foreword

Latin America has never mattered more for the United States. Theregion is the largest foreign supplier of oil to the United States and astrong partner in the development of alternative fuels. It is one of theUnited States’ fastest-growing trading partners, as well as its biggestsupplier of illegal drugs. Latin America is also the largest source of U.S.immigrants, both documented and not. All of this reinforces deepU.S. ties with the region—strategic, economic, and cultural—but alsodeep concerns.

The report makes clear that the era of the United States as thedominant influence in Latin America is over. Countries in the regionhave not only grown stronger but have expanded relations with others,including China and India. U.S. attention has also focused elsewherein recent years, particularly on challenges in the Middle East. The resultis a region shaping its future far more than it shaped its past.

At the same time Latin America has made substantial progress, italso faces ongoing challenges. Democracy has spread, economies haveopened, and populations have grown more mobile. But many countrieshave struggled to reduce poverty and inequality and to provide forpublic security.

The Council on Foreign Relations established an Independent TaskForce to take stock of these changes and assess their consequences forU.S. policy toward Latin America. The Task Force finds that the long-standing focus on trade, democracy, and drugs, while still relevant, isinadequate. The Task Force recommends reframing policy around four

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xi

xii Foreword

critical areas—poverty and inequality, public security, migration, andenergy security—that are of immediate concern to Latin America’sgovernments and citizens.

The Task Force urges that U.S. efforts to address these challengesbe made in coordination with multilateral institutions, civil societyorganizations, governments, and local leaders. By focusing on areas ofmutual concern, the United States and Latin American countries candevelop a partnership that supports regional initiatives and the countries’own progress. Such a partnership would also promote U.S. objectivesof fostering stability, prosperity, and democracy throughout the hemi-sphere.

On behalf of the Council on Foreign Relations, Iwish to thank TaskForce chairs Charlene Barshefsky and James T. Hill, two distinguishedpublic servants with deep knowledge of the region. Their intellect andleadership ably guided theTask Force toward consensus. The Council isalso indebted to theTaskForcemembership, a diversegroupcomprisingmany of our nation’s preeminent scholars, business leaders, and policypractitioners focused on Latin America. Each member’s input andinsight contributed much to the report. Finally, I wish to thank JuliaE. Sweig, the Nelson and David Rockefeller senior fellow and directorof Latin America studies at the Council, for generously offering hersupport and guidance, and Shannon K. O’Neil, the Council’s fellowfor Latin America studies, for skillfully and professionally directingthis project. The hard work of all those involved has produced anauthoritative report that examines changes in Latin America and inU.S. influence there, while taking account of the region’s enduringimportance to the United States. I expect its agenda for renewedU.S. engagement to influence policy during the upcoming presidentialtransition and for years to come.

Richard N. HaassPresident

Council on Foreign RelationsMay 2008

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Acknowledgments

Shortly after joining the Council as a fellow, it was my great pleasureto take on the direction of this Independent Task Force on U.S.-LatinAmerica relations.

With the immodest goal of creating a new blueprint for hemisphericrelations, the Task Force has benefited tremendously from the guidanceof its two eminent chairs, Charlene Barshefsky and James T. Hill. Notonly did they bring their own significant experience and expertise onthe region to the table, but they also deftly guided the larger group inthe exchange of ideas and in working toward achieving consensus ona broad range of issues. Julia E. Sweig, senior adviser and executiveeditor to the project, was instrumental in shaping this report, providingideas, guidance, and support over the yearlong tenure of the Task Force.

In addition to our distinguished Task Force members and observers,this report benefited from the information and opinions generouslyshared by a wide range of individuals during trips to Bolivia and Brazil.Ambassador Gustavo Guzman, Ivan C. Rebolledo, and Eduardo A.Gamarra were particularly helpful during our trip to Bolivia, as wasPaulo Sotero during our visit to Brazil. The Task Force also benefitedgreatly from conversations with and presentations by Jorge Castaneda,Wolf Grabendorff, Rebeca Grynspan, Peter Hakim, Celso Lafer, LuizFelipeLampreia,DorisM.Meissner,MariaOtero,AmbassadorAntonioPatriota,ArturoC.Porzecanski,David J.Rothkopf,AmbassadorArturoSarukhan, Admiral James G. Stavridis, and Roberto A. Suro.

The success of this effort relied on many Council staff. SebastianChaskel and Jacyln Berfond ably conducted extensive research to sup-

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xiii

xiv Acknowledgments

port the findings, and Michael Bustamante and Daniel Kurtz-Phelaneach drafted segments of the report. Dan also deserves recognition forhis masterful editing job, and Sebastian for helping guide the TaskForce through many revisions and through its launch and distribution.Leigh Gusts and the library staff helped us find much of the informationneeded for the writing, and Council Fellows Laurie A. Garrett, MichaelA. Levi, and David G. Victor all lent their expertise at importantmoments. Lee Feinstein and Lindsay Workman and then Anya Sch-memann and Swetha Sridharan skillfully shepherded the Task Forcefrom start to finish, providing a critical eye when necessary and coordi-nating closelywith theCouncil’s variousdepartments.Once completed,Patricia Lee Dorff and Lia Norton took the written document andpolished it into a Task Force report.

Along the way, Irina A. Faskianos led the Council’s National Pro-gram in setting up meetings spanning six cities from Los Angeles toBoston, while Nancy D. Bodurtha and Kay King led the Meetingsdepartments in organizing preview and release events for Councilmembers in New York and Washington, DC. Lisa Shields and theCommunications team and the Corporate and Outreach programsworked hard to get the report into the right hands, as did Kay and herable team in Washington, DC.

We are particularly grateful to Council President Richard N. Haassfor convening this Task Force and to Director of Studies Gary Samore,who supported this initiative, which has allowed us to work closely withmany Council staff and members and the broader policy community inthe effort to substantially rethink U.S.-Latin America relations.

This project was made possible by David M. Rubenstein’s supportfor the Task Force program. The Council also expresses its thanks tothe Ford Foundation and the W.K. Kellogg Foundation for theirsupport for the Latin America studies program. Now completed, ourhope is that this report will lay the groundwork for new conversations,and new U.S. policies, transforming U.S.-Latin America relations forthe better.

Shannon O’NeilProject Director

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South America

Source: CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/reference_maps/south_america.html.

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List of Acronyms

DEA Drug Enforcement AdministrationDHS Department of Homeland SecurityDR-CAFTA Dominican Republic and Central America Free

Trade AgreementFARC Fuerzas Armadas Revolucionarias de ColombiaFinCEN Financial Crimes Enforcement NetworkFTAA Free Trade Area of the AmericasG20 Group of 20GDP gross domestic productIDB Inter-American Development BankIEA International Energy AgencyIMF International Monetary FundIRCA Immigration Reform and Control ActLNG liquefied natural gasMCA Millennium Challenge AccountNAEWG North America Energy Working GroupNAFTA North American Free Trade AgreementNGO nongovernmental organizationOAS Organization of American StatesOECD Organization for Economic Cooperation and

DevelopmentPDVSA Petroleos de VenezuelaPEMEX Petroleos MexicanosUSAID U.S. Agency for International DevelopmentVAT value-added taxesWHO World Health Organization

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xix

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Task Force Report

Executive Summary

This Task Force report takes stock of the current situation in LatinAmerica and the main challenges and opportunities for U.S.-LatinAmerica relations. Latin America has benefited greatly in recent yearsfrom democratic opening, stable economic policies, and increasinggrowth. Many countries are taking advantage of these developmentstoconsolidatedemocratic institutions,broadeneconomicopportunities,and better serve their citizens. Yet Latin American nations face dauntingchallenges as they integrate into global markets and work to strengthenhistorically weak state institutions. These challenges increasingly matterfor the United States, as deepening economic and social ties link U.S.well-being to the region’s stability and development.

Rather than an exhaustive study of U.S.-Latin America relationsandpolicies, this reportdoesnot reprisemany long-standing initiativesorthe intricacies of each bilateral relationship. Nor, given Latin America’scomplexity and level of development, does it seek to define the entireU.S. approach with one overarching grand idea. Instead, the TaskForce identifies four critical issues and four strategic relationships thatmerit special attentionat thispoint in time.Povertyandinequality,publicsecurity, human mobility, and energy security represent fundamentalchallenges and opportunities for the region and for U.S.-Latin Americarelations. These factors affect traditional U.S. objectives of democracypromotion, economic expansion, and counternarcotics. They alsoreflect new policy issues arising from the increasing societal and eco-nomic integration of the Western Hemisphere. In addition, the Task

3

4 U.S.-Latin America Relations: A New Direction for a New Reality

Force calls for the deepening of the United States’ relations with Mexicoand Brazil, and the redefining of relations with Venezuela and Cuba.

In pursuing its objectives through the concrete policy recommenda-tions laid out in this report, the United States must focus its efforts andresources on helping Latin America strengthen the public institutionsnecessary to address the challenges identified in this report. In doingso,Washington shouldwork inpartnershipwithLatinAmericannationsthrough multilateral organizations such as the World Bank, Inter-American Development Bank (IDB), International Monetary Fund(IMF), International Finance Corporation, and Organization of Ameri-can States (OAS). It should also continue to work closely with civilsociety organizations and domestic and international businesses to createmore inclusive economic, social, and political opportunities for LatinAmerican countries and their citizens, which will benefit U.S. policygoals.

Achieving the ambitious goals of strengthening institutions andimproving the lives of Latin Americans will require long-term effortson the part of many participants, most importantly Latin Americangovernments and societies themselves.Nevertheless, there is a significantsupporting role for the United States. Expanding its policy frameworkand concentrating on strategic regional partnerships will best promoteU.S. interests, enhancing stability, security, and prosperity throughoutthe hemisphere.

Introduction

For over 150 years, the Monroe Doctrine provided the guiding princi-ples for U.S. policy toward Latin America, asserting U.S. primacy inthe foreign affairs of the region. Over the past two decades, thoseprinciples have become increasingly obsolete. Washington’s basic policyframework, however, has not changed sufficiently to reflect the newreality. U.S. policy can no longer be based on the assumption that theUnited States is the most important outside actor in Latin America. Ifthere was an era of U.S. hegemony in Latin America, it is over.

In most respects, this shift reflects positive developments withinLatin America itself. The region has undergone a historic transformationpolitically, with military-authoritarian rule giving way to vibrant, ifimperfect, democracy in almost every nation. Economically, LatinAmerica is now one of the more open market regions in the worldand a crucial global provider of energy, minerals, and food. None ofthis is to say that Latin America has entirely overcome its history ofpolitical tumult or done enough to alleviate poverty, improve competi-tiveness and human capital, or correct extreme inequality. But it doesmean that U.S. policymakers must change the way they think aboutthe region. Latin America is not Washington’s to lose; nor is it Washing-ton’s to save. Latin America’s fate is largely in Latin America’s hands.

A failure to acknowledge how Latin Americans define their ownchallenges has created new political strains in recent years. It has alsocaused U.S. policymakers to overlook the ways in which the United

5


States can meaningfully contribute to Latin America’s progress—fur-thering the United States’ own interests in the process. By truly begin-ning to engage Latin America on its own terms, Washington can markthe start of a new era in U.S.-Latin America relations.

It is a cliche to bemoan Americans’ lack of interest in Latin America.Still, this disinterest remains vexing given the region’s proximity to theUnited States and the remarkable interconnectedness of U.S. and LatinAmerican economies and societies. In recent years, as Washington’sattention has been focused on crises elsewhere in the world, the connec-tions have only deepened. From 1996 to 2006, total U.S. merchandisetrade with Latin America grew by 139 percent, compared to 96 percentfor Asia and 95 percent for the European Union (EU).1 In 2006, theUnited States exported $223 billion worth of goods to Latin Americanconsumers (compared with $55 billion to China).2 Latin America isthe United States’ most important external source of oil, accountingfor nearly 30 percent of imports (compared with 20 percent from theMiddle East), as well as its main source of illegal narcotics. And as aresult of both conditions in Latin America and demand for workers inthe United States, migration from the region has accelerated. Latinosnow account for 15 percent of the U.S. population, nearly 50 percentof recent U.S. population growth, and a growing portion of the elector-ate—allowing Latino voters increasingly to shape the U.S. politicalagenda. Cross-border community and family ties, as well as the Spanish-language media, mean that Latin America remains part of many Latinos’daily lives and concerns. For all of these reasons, Latin America’s well-being directly affects the United States.

But even with such integration, the opening of Latin Americaneconomies and the globalization of Latin American societies means thatU.S. policy is now but one of several competing factors capable ofinfluencing the region. Latin American states, especially the larger ones,do not consider their interests to be primarily determined by diplomatic,trade, or security ties with the United States. Brazil has made inroads

1 J. F. Hornbeck, ‘‘U.S.-Latin America Trade: Recent Trends,’’ Congressional ResearchService,May18,2007,available athttp://www.nationalaglawcenter.org/assets/crs/98-840.pdf.

2 ‘‘Trade in Goods (Imports, Exports and Trade Balance) with China,’’ Foreign TradeStatistics, U.S. Census Bureau, available at http://www.census.gov/foreign-trade/balance/c5700.html#2006.

Introduction 7

into groupings such as the South-South Dialogue with South Africaand India and the Group of 20 (G20), while countries such as Chileand Mexico have struck trade and investment agreements with the EUand a number of Asian countries, China most prominently.

The economic and political diversification of Latin America isreflected in Latin American attitudes as well. Esteem for U.S. globaland hemispheric leadership is at its lowest level in the region in recentmemory. In 2002, according to the Pew Global Attitudes Project, 82percent of Venezuelans, 34 percent of Argentineans, and 51 percentof Bolivians had a favorable view of the United States; those numbershad fallen to 56, 16, and 43 percent by 2007. The percentage of LatinAmericans who approved of U.S. ideas on democracy decreased from45 percent in 2002 to 29 percent in 2007.3 This general distrust of theUnited States has allowed Presidents Hugo Chavez of Venezuela, EvoMoralesof Bolivia,RafaelCorreaof Ecuador, andevenFelipeCalderonof Mexico to bolster their domestic popular support by criticizingWashington. Most Latin Americans still prefer a mutually respectfuland productive relationship with the United States, but the factorsdriving Latin America’s desire for greater independence are likely toshape the region’s posture toward the United States well into the future.

U.S. Policy—Past, Present, and Future

As the Cold War began to wind down in the late 1980s, Washington’sfocus in Latin America shifted from containing communism and com-bating left-wing insurgencies to three priorities: opening markets,strengthening democracy, and stemming the flow of illegal drugs. Thesepriorities have remained remarkably consistent and largely enjoyedbipartisan support over the past two decades.

The focus on economic opening at first centered on agreementssuch as the Caribbean Basin Initiative (1983), the Andean Trade Prefer-ence Act (1991), and the North American Free Trade Agreement(NAFTA, 1993); negotiations for the Free Trade Area of the Americas

3 ‘‘Rising Environmental Concern in 47-Nation Survey: Global Unease with Major WorldPowers,’’ The Pew Global Attitudes Project, Pew Research Center, June 27, 2007, availableat http://pewglobal.org/reports/pdf/256.pdf.


(FTAA), begun in 1994, are ongoing. U.S. efforts to strengthen democ-racy in Latin America began with President George H.W. Bush’s rolein the adoption of Resolution 1080 in the Organization of AmericanStates, which solidified multilateral support for democracy in the region.Both the rhetoric and substance of democracy promotion continuedunder President Bill Clinton, with U.S. policies designed to fosterbroad-based political participation and the development of civil society.In 1994, the Clinton administration sent 20,000 U.S. troops under theauspices of the United Nations to restore democratically elected Haitianpresident Jean-BertrandAristide tooffice.Over thecourseof thedecade,it also actively participated in diplomatic efforts to avert direct threats todemocracy in Guatemala (1993), Paraguay (1996), and Ecuador (2000).

The ‘‘war on drugs’’ escalated under President Ronald Reagan,culminating in the creation of the White House’s Office of NationalDrug Control Policy in 1988, and continued to receive significantfunding under Presidents Bush and Clinton. During the first Bushadministration, U.S. troops invaded Panama to capture head of stateManuel Noriega for his involvement in drug trafficking; backed theColombian state’s hunt for Pablo Escobar and its fight against otherdrug cartels; and began a certification process to ensure foreign govern-ments were cooperating with U.S. counternarcotics efforts. PresidentClinton inaugurated Plan Colombia with $1.3 billion in aid in 2000,with the goal of not only eliminating cocaine production but alsobolstering the Colombian government’s efforts to defeat a drug-fueledguerrilla insurgency.

When he was elected in 2000, President George W. Bush pledgedto make Latin America a foreign policy priority. He announced severalmajor new initiatives, most importantly a sweeping immigration reformthat would be at the center of the U.S.-Mexico relationship. Yet sincethe terrorist attacks of September 11, 2001, American attention hasbeen diverted elsewhere, prompting the charge—one also made againstits predecessors—that theBush administration has ignored Latin Ameri-ca’s needs. The three pillars of U.S. policy toward the region remained,but U.S. initiatives have had mixed results. Congress ratified tradeagreements with Chile (2004), the Dominican Republic and CentralAmerica (DR-CAFTA, 2007), and Peru (2007), but hopes for a hemi-sphere-wide freetradeareahaverecededandagreementswithColombia

Introduction 9

and Panama have been caught up in U.S. domestic politics. Druginterdiction and eradication efforts have continued, with an additional$4 billion invested in Plan Colombia, but drug flows remain undimin-ished anddrugviolence inMexicohas escalateddramatically, promptingthe proposal, in October 2007, of a $1.4 billion aid package to theMexicangovernment. U.S. involvement in the Inter-American Demo-craticCharter in2001helped furthermultilateral support fordemocracy,but a year later the United States was alone in the hemisphere inseemingly endorsing a military coup against Venezuela’s democraticallyelected president, Hugo Chavez. This exacerbated tensions betweenthe United States and Venezuela and—along with public statementsby U.S. ambassadors in Bolivia and Nicaragua that were perceived asattempted interventions in the democratic process—undermined thecredibility of U.S. democracy promotion efforts.

The limited success of many U.S. foreign policy initiatives threatensU.S. interests.Persistentpoverty andweak state institutionshaveallowedthe illegal narcotics industry to continue flourishing, while crime hasescalated across much of the region. (Homicide rates have doubledsince the 1980s, and rates of violent crime are now six times higher inLatin America than in the rest of the world.4) The seeming inabilityof liberal democratic governments in Latin America to deliver security,opportunity, and equitable prosperity has threatened to underminepublic faith in representative democracy, encouraging the rise of politi-cians promising sweeping political and economic change. Much of theconcern has centered on President Chavez of Venezuela. Since beingelected in 1998, he has used oil profits to fund high-profile publicprojects and welfare programs while ruling by decree and systematicallyeradicating checks on his own power. More worrying in the regionalcontext, he has also embarked on a campaign to alienate Latin Americafrom theUnited States and promoted foreign policies that coulddestabi-lize the region (such as pushing for recognition of the Fuerzas ArmadasRevolucionarias de Colombia [FARC] as a political rather than terroristorganization).

4 Jorge Sapoznikow et al., ‘‘Convivencia y Seguridad: Un Reto a la Gobernabilidad,’’ Inter-American Development Bank, 2000.


Recent strains in the U.S.-Latin America relationship, although real,are less a result of alleged U.S. policy failings than a product of deeperchanges: while the basic tenets of U.S. policy have not changed, LatinAmerica has. Opening economies, strengthening democracies, andfighting drug production and trafficking remain important priorities.But continuing to build U.S. policy on these pillars alone reflects amistaken sense of what U.S. policy can realistically achieve and afailure to recognize where Washington can meaningfully bolster LatinAmericans’ efforts to improve their own quality of life, providing anewfoundation forU.S.-LatinAmerica relations in theprocess.Achiev-ing U.S. objectives and protecting U.S. interests in the Western Hemi-sphere requires an unsentimental and reality-based assessment of thecomplex and dynamic changes under way in Latin America and inU.S.-Latin America relations—and of the ways in which the UnitedStates can influence those changes for the better.

The Task Force has identified four emerging and urgent prioritiesthat should provide the basis of U.S. policy toward Latin America: 1)poverty and inequality; 2) citizen security; 3) migration; and 4) energysecurity and integration. These four priorities bear directly on U.S.interests, as their fate will have repercussions on regional stability, demo-cratic consolidation, economic growth and development, and counter-narcotics efforts. As important, these four priorities also represent impor-tant opportunities for the region and for U.S. policy, opening avenuesof dialogue on issues of mutual interest to Latin America and theUnited States.

Despite the widespread liberalization of Latin American marketsand the initiation of targeted development aid programs, nearly 200million Latin Americans—37 percent of the region’s population—stilllive in poverty, and the region remains one of the most income-unequalin the world. The resulting socioeconomic barriers hinder U.S. interestsby spawning political polarization and social turmoil, exposing thevulnerability of already weak state institutions,5 fueling violence, andhindering economic growth. Poverty and inequality have also under-mined support for democracy, as Washington’s traditional focus on

5 ‘‘Social Panorama of Latin America 2007,’’ Economic Commission for Latin Americaand the Caribbean (ECLAC), 2007, available at http://www.eclac.org/id.asp?id�30309.

Introduction 11

free and fair elections in its democracy promotion efforts has provedinsufficient to address fundamental concerns about economic and physi-cal security. Latin America’s citizens rightly expect democracy to delivermore equality, social justice, and prosperity—not just formal representa-tion.

Likewise, the focus of U.S. security resources on drug eradicationand interdiction has done little to address the underlying factors thatdrive drug production, trafficking, and consumption. After many yearsand billions of dollars, U.S. policy has been relatively ineffective inreducing either the supply of or demand for drugs, while public insecu-rity in Latin America has increased sharply. Crime and violence nowrank as two of the most critical threats across much of the region.

The United States cannot solve these problems, but it can helpstrengthen public institutions and bolster Latin American initiatives todeal with them. U.S. interests will benefit from explicitly recognizingthese deep-rooted challenges and workingmore closely with the privatesector,civil society,multilateral institutions, andLatinAmericangovern-ments to address them. The Task Force finds that strong institutions designedto reduce poverty and inequality and improve citizen security are necessary forLatin American citizens as well as for the realization of core U.S. objectivesin the region—democratization, economic growth, and drug control. Whilestrengthening institutions is first and foremost an issue forLatinAmericangovernments to address, the United States can play a role by assistingin targeted ways.

Nearly eighteen million Latin American migrants, legal and illegal,now live in the United States, and the pace of migration—drivenlargely by the lack of economic opportunity at home—has acceleratedin the last twenty years, despite U.S. immigration policies officiallydesigned to thwart it. Substantial percentages of the populations ofMexico and many Central American and Caribbean countries resideand work in the United States; transnational ties formed by individualsand communities constitute de facto U.S.-Latin America integration.The increasing importance of energy resources has further deepenedU.S.-Latin America ties, while heightening anxiety over growing‘‘resource nationalism’’ in countries such as Venezuela, Bolivia, andEcuador. Latin America already supplies more oil to the United States


than does the Middle East, and the region has great potential to be amajor provider of alternative fuel sources, increasing U.S. and regionalenergy security through diversification. The Task Force finds that theissues of migration and energy security represent not only policy challenges, butalso opportunities for the United States and for deepening U.S.-Latin Americaties. The United States can play a positive role in the development ofLatin America’s traditional and alternative energy markets, enhancingU.S. energy security in the process, while a true reform of immigrationpolicy would bring economic benefits and, through cooperation,enhanced border security for the United States and Latin America alike.

While many policy concerns span the hemisphere, attention toparticular bilateral relations is also in order. Although all the countriesin Latin America present unique challenges and opportunities, the TaskForce focuses on the complex bilateral relations with four nations:Brazil, Mexico, Venezuela, and Cuba. The Task Force believes that deepen-ing strategic relationships with Brazil and Mexico, and reformulating diplomaticefforts with Venezuela and Cuba, will not only establish more fruitful interactionswith these countries but will also positively transform broader U.S.-LatinAmerica relations.

The realities of poverty and inequality, public security, humanmobility, and energy require a more fulsome approach toward LatinAmerica, one that recognizes urgency as well as the primacy of LatinAmerican governments in these efforts. The limits on U.S. policy areequally clear, as these four areas demand concerted efforts by local,state, national, and international governments; the private sector; civilsociety organizations; and multilateral institutions. As importantly, theseissues present real opportunities to engage Latin American countriesas partners on problems of mutual concern. This expanded policyframework, combined with greater attention to strategic regional part-nerships, will provide a more effective foundation for U.S. policygoals—stability, security, and ultimately prosperity for the United Statesand for its neighbors.

Poverty and Inequality

Compared to the ‘‘lost decade’’ of the 1980s and the low growth ratesof the 1990s, Latin America’s economic performance in the early yearsof the twenty-first century has been strong.6 The region as a wholegrew 5.6 percent in 2007, the fourth consecutive year of growth ofmore than 4 percent—marking the strongest economic expansion sincethe 1970s. Panama, Argentina, and Venezuela led with gross domesticproduct (GDP) growth of 11.2, 8.7, and 8.4 percent, respectively,while several other countries—Colombia, the Dominican Republic,Peru, and Uruguay—grew at 7 percent or more. Even Cuba, accordingto U.S. estimates, grew at 8 percent, due to high nickel and cobaltprices, as well as tourism.

Other economic indicators have also been positive. Regional infla-tion was 5.4 percent in 2007, a remarkable achievement given theregion’s history of hyperinflation. In Peru and Brazil, for example,inflation had gone from more than 3,000 percent in the late 1980s andearly 1990s to 1.8 percent and 3.6 percent, respectively, in 2007. Soundfiscal management in many countries has left nearly every governmentwith a strong fiscal position, while Latin America as a whole has acurrent account surplus of almost 4 percent of GDP. The externaldebt-to-GDP ratio has also fallen considerably—a function of both

6 The following data, unless otherwise noted, came from the Economic Commission onLatinAmerica andtheCaribbean(ECLACStatisticalYearbook,2007;ECLACSocialPanoramaof Latin America, 2007), the World Bank (World Development Indicators, 2008), and theInternational Monetary Fund (Western Hemisphere Economic Outlook, April 2008; WorldEconomic Outlook, April 2008).

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growth and effective economic management—to a regional averageof 22 percent of GDP in 2006. The regional poverty rate has declinedfrom 48 percent in the 1990s to 37 percent today, though the numberof people living in poverty (due to population growth) is essentiallyunchanged.

Still, the regional economic picture, although an improvement overthe last two decades, leaves much to be desired—particularly whenmeasured against other parts of the developing world. While LatinAmerica grew at an annual average of 2.1 percent between 1995 and2005, it was outpaced by sub-Saharan Africa (3.8), South Asia (5.8),and East Asia and the Pacific (7).7 Even the relatively strong 2007growth rate was topped by sub-Saharan Africa (6.1), South Asia (8.4),and East Asia and the Pacific (10), and the World Bank projects thatthis disparity will persist in the coming years.8 Latin America’s competi-tiveness, as measured by the World Bank’s ‘‘Doing Business’’ project,also trails its competitors.’9 In the World Economic Forum’s ‘‘GlobalCompetitiveness Report,’’ only Chile breaks the top 30 out of 131countries, and Bolivia, Ecuador, Nicaragua, and Paraguay rank nearthe bottom. China and India stand at 34 and 48, well ahead of Mexico(52), Brazil (72), and Argentina (85).10

Butmoreconcerning than theoverall growthpicture is LatinAmeri-ca’s slow progress in reducing poverty and inequality. The regionalpoverty rate of 37 percent is not much lower than the figure for 1980(40 percent), while the number of poor in Latin America has actuallyincreased, from 136 million in 1980 to nearly 200 million today. (Thesefigures, of course, mask large subregional differences: both Chile andUruguay have reduced poverty to well under 20 percent, while inHonduras and Nicaragua poverty rates are near 70 percent.) In 1990,

7 ‘‘Global Economic Prospects 2008,’’ World Bank, 2008, available at http://sitere-sources.worldbank.org/INTGEP2008/Resources/complete-report.pdf.

8 Ibid.9 Latin American countries rank on average at 87 among 178 countries in terms of ease of

doing business, behind East Asia and the Pacific (77) as well as Eastern Europe and CentralAsia (76), although ahead of the Middle East and North Africa (96), South Asia (107), andsub-Saharan Africa (136). ‘‘Doing Business 2008,’’ World Bank Group, 2008, available athttp://www.doingbusiness.org/.

10 ‘‘The Global Competitiveness Report 2007–2008,’’ World Economic Forum, availableat http://www.gcr.weforum.org/.


28 percent of the population in Latin America and the Caribbean livedon less than two dollars a day; by 2005 the rate still stood at 22 percent.East Asia, by contrast, has reduced the percentage of its populationliving on less than two dollars a day to 29 percent, down from 67percent in 1990.

Inequality in Latin America, meanwhile, remains extreme. Whilethere have been mild improvements in the Gini coefficient11 in somecountries, the figure forLatinAmerica as awhole is still 0.52—comparedto 0.46 for sub-Saharan Africa, 0.41 for the United States, 0.40 for EastAsia, and between 0.25 and 0.35 for European nations. In Brazil, thelargest country in Latin America, the Gini coefficient is 0.60; the poorest40 percent of the population accounts for just over 8 percent of nationalincome, while the richest 20 percent accounts for almost 70 percent.Across the region, these figures point to deeper structural realities, suchas unequal land distribution and discrimination.

Such extreme and persistent inequality has a variety of negativeramifications for Latin America and the United States—ramificationsthat, if not addressed, threaten to undermine Latin American govern-ments and U.S. interests in development of the region’s broader eco-nomic and political stability. Income disparity is closely linked withunequal access to health care, education, and credit and thus, as theWorld Bank and Inter-American Development Bank have demon-strated, hampers worker productivity, social mobility, and overallgrowth. While the region has made some progress in terms of healthcare (infant mortality has fallen by half and life expectancy has increasedby six years, to seventy-five, since 1980),12 the gains have in many casesbeen concentrated among the better-off portions of the population. InBolivia, for example, 98 percent of the people in the highest-incomequintile have access to health care services, while only 20 percent ofthose in the lowest quintile do. Previously controlled infectious diseasessuch as yellow fever, dengue, pertussis, measles, and even the machupovirus are reemerging; the Centers for Disease Control and Prevention

11 Income inequality is often measured by the Gini coefficient, a zero-to-one scale wherezero represents perfect income equality (everyone has the same income) and one representsperfect income inequality (a single person has all the country’s income).

12 The World Bank Annual Report 2007, World Bank, 2007, available at http://siteresources.worldbank.org/EXTANNREP2K7/Resources/English.pdf.


estimates that some thirteen million people in the region are infectedwith chagas, an often fatal disease spread by insects.

A vicious cycle of poverty and economic inequality handicaps mostLatin American countries, undermining their ability to successfullycompete and effectively finance and deliver governmental services,includingpublic security, in an increasinglyglobalizedworld.Accordingto a World Bank study, a 10 percent drop in poverty levels can increasegrowth by 1 percent, while a 10 percent increase in poverty levels canlower growth rate by 1 percent and reduce investment by up to 8percent of GDP.13 The effects of ethnic and racial inequity are evenstronger: one study has shown that the economies of Bolivia, Brazil,and Guatemala would potentially expand by 37, 13, and 14 percent,respectively, if the long-term social exclusion of Afro-descendant andindigenous groups ended.14

Poverty and inequality alsohavepotentiallyproblematic implicationsfor democratic development. With greater democratic representationand regular elections inLatinAmerica, theyhavebecomemajorpoliticalissues. Indeed, the widely cited ‘‘turn to the left’’ in the 2005–2007Latin American elections reflected the economic realities and concernsof theaveragevoter.Growingwagedisparity, swellingyouthunemploy-ment, weak enforcement of labor protections, and persistent povertyhave left some citizens disillusioned with democracy. A survey byLatinobarometro, aLatinAmericanpollingcompany,of19,000individ-uals in eighteen Latin American countries shows that between 1997and 2007 those who felt ‘‘democracy is preferable to any other kindof government’’ fell from 63 percent to 54 percent overall. Supportfor democracy was higher in countries with strong economic perfor-mance and lower in countries with weaker economic outcomes. Vene-zuelans were among the most satisfied with their democracy largelybecause they felt the government was ‘‘addressing their needs.’’ Incontrast, Salvadorans had one of the lowest opinions of their current

13 Guillermo E. Perry et al., ‘‘Poverty Reduction and Growth: Virtuous and Vicious Cycles,’’WorldBank,2006, available athttp://siteresources.worldbank.org/EXTLACOFFICEOFCE/Resources/870892-1139877599088/virtuous_circles1_complete.pdf.

14 Jonas Zoninsein, ‘‘The Economic Case for Combating Racial and Ethnic Exclusion inLatin American and Caribbean Countries,’’ Inter-American Development Bank, May 2001.


and future economic situation and correspondingly registered both lowsatisfaction with democracy and low approval of their government.

The Task Force finds that despite positive recent trends, Latin America stilllags behind other world regions in its efforts to reduce poverty and incomeinequality. These barriers represent not only fundamental challenges forLatinAmericancitizens, but they also impedeLatinAmerica’s economicdevelopment, competitiveness, and democratic consolidation. As aresult, poverty and inequality also represent fundamental challenges toU.S. objectives in the region. Further progress toward those objectiveswill require that theUnited States putunderlying economic andpoliticalconditions at the center of its policy strategies.

Foreign Policy Efforts: Aid, Trade, and the Fightagainst Informality

From the1950s through the1970s, efforts by international organizationsand developed countries to spur development and reduce povertyin poor nations—including much of Latin America—centered on acombination of aid and loans. In the wake of the debt crisis in the 1980s,theapproachshifted somewhat toa focusonpromotingmacroeconomicgrowth through ‘‘structural adjustment’’ packages. This developmentstrategy—often called the Washington Consensus—promoted marketand trade liberalization, as well as specific fiscal policies. Policymakersfrequently focused on the benefits of free trade. In the United States,advocates of free trade expected market opening to provide not onlybenefits for U.S. businesses and consumers but also widespread eco-nomic opportunities for Latin America and a reduction of illegal immi-gration to the United States. President Clinton, for example, arguedin 1993 that NAFTA would mean ‘‘more disposable income [forMexicans] to buy more American products, and there will be less illegalimmigration because more Mexicans will be able to support theirchildren by staying home.’’

Since the 1980s, market opening and formal trade agreementsbetween the United States and Latin American countries have increasedtrade and brought a range of other benefits to both sides. UnderNAFTA, trade between the United States, Canada, and Mexico has


almost tripled. Mexico has become the United States’ third-largesttrading partner and the second-largest buyer of U.S. exports, whileNAFTA rules and regulations have strengthened intellectual propertyprotection, dispute-resolution mechanisms, and safeguards for labor andenvironmental standards in Mexico. Newer trade agreements, such asDR-CAFTA and most recently Peru, promise to increase trade andeconomic opportunities as well.

But all of these measures have had less of an effect on job creationand poverty alleviation than was initially indicated. The opening ofLatinAmericaneconomies, the successful correctionofmacroeconomicimbalances, and the reform of economic governance structures havenot substantially lowered poverty or structural inequality.15 (Many arguethat the fiscal and economic policies of the Washington Consensushave actually heightened inequality in the region, as the enacted policiesdid not address structural inequalities or micro-level bottlenecks.) Partof the explanation for these shortcomings lies in the maintenance ofU.S. government policies—namely, agricultural subsidies and rules-of-origin limits on apparel—that restrict Latin American exports preciselyin the areas in which the region has a comparative advantage. At thesame time, however, many Latin American governments have notimplemented the domestic policies necessary to ensure that the benefitsfrom open markets are more evenly spread. These domestic politicaland institutional obstacles—in both Washington and Latin America—havehad a corrosive effecton support for globalizationand trade reform.

At the same time, the nature of employment in Latin America haschanged in worrying ways. While official unemployment has fallen inrecent years, now averaging roughly 9 percent throughout the region,gains mostly result from growth within the informal labor market. Theinformal sector includes many self-employed workers—such as artisans,handymen, taxi drivers, and street vendors—as well as informal salariedworkers, such as domestic employees, micro-firm workers, and those

15 Brazil may have actually lowered inequality through opening its economy in the 1990s,but it stands alone. See Francisco H.G. Ferreira, Phillippe G. Leite, and Matthew Wai-Poi,‘‘Trade Liberalization, Employment Flows and Wage Inequality in Brazil,’’ World Bank PolicyResearch Working Paper 4108, January 2007, available at http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2007/01/09/000016406_20070109094309/Rendered/PDF/wps4108.pdf.


whoworkin larger firmsunder informal laborarrangements.Altogether,it is estimated that about 50 percent of the labor force in the regionholds informal sector jobs. (National figures range from 32 percent inChile and 43 percent in Mexico to more than 60 percent in Bolivia,Ecuador, Nicaragua, and Paraguay.) Informal employment has offeredsome workers—particularly women and low-skilled workers in gen-eral—a way to create wealth and to alleviate extreme poverty.16 Butinformal salariedworkers earn less, averagingbetween40 and66percentof formal salaried employees, and the spread of informality has limitedthe state’s capacity to provide basic services by removing much of theeconomy from the tax system. It leaves, as a consequence, a substantialproportion of workers without access to social safety-net programs orhealth care. For the poor—those more likely to be in the informalsector—this limits opportunities and productivity in the longer term.

The Task Force finds that trade—which has spurred regional growth—anddevelopment aid have not and cannot alone lead to sufficient reductions in povertyand economic inequality in Latin America. The growth of the informal sector,while often successful in increasing incomes for the poor, undermines the economicbase of Latin American countries and the effectiveness of state institutions, whichare critical in addressing the region’s fundamental challenges.

Latin American Solutions to Latin America’sProblems

Some countries have broken out of the cycle of poverty. The mostnotable example is Chile, which has averaged 5.6 percent growth since1990. It has also benefited from a strong and lasting commitmentto consistent macroeconomic policies, open markets, expanded socialprograms, and institutional strengthening, broadly shared across thepolitical spectrum, since its transition to democracy in 1990. Chile hasreduced its poverty levels from over 40 percent in the late 1980s toaround 14 percent in 2006 (nearly equal to U.S. rates). The absolutenumber of citizens considered poor fell from close to five million inthe late 1980s to just over two million at the end of 2006. Chile has

16 ‘‘Povertyandthe InformalSector,’’UnitedNationsEconomicandSocialCouncil,October2, 2006, available at http://www.unescap.org/pdd/CPR/CPR2006/English/CPR3_1E.pdf.


been less successful at reducing its high rate of income inequality, thoughthis too has fallen slightly during the last few years.

Other Latin American experiences show that poverty and inequalityreductions are not wholly dependent on uninterrupted economicgrowth. Brazil, for example, has reduced poverty and inequality duringthe last two decades despite the absence of consistent strong growth:by controlling inflation, it managed to lower poverty rates from a 1990high of 48 percent to 36 percent by 1996. Though poverty levels creptback up to 39 percent in the early 2000s, modest economic growthcombined with conditional cash transfer programs in recent years havehelped reduce poverty to 33 percent by 2006. Brazil has also managedto begin lowering its notoriously high levels of income inequality inrecent years. In Mexico, similar cash transfers, along with low inflation,helped reduce poverty levels from 47 percent in 1990 to 32 percentin 2006.

These achievements represent domestic policy efforts—under civil-ian democratic governments—to address critical concerns of the votingpopulation and indicate real improvements in the lives of millionsof citizens throughout Latin America. These experiences show thatdomestic solutions, sometimes drawing on foreign models adaptedto the local environment, can be effective. Conditional cash transferprograms have spread across the region, including Oportunidades inMexico (which was recently cited by Mayor Michael Bloomberg as amodel for a pilot program in New York City), Famılias en Accion inColombia, and Bolsa Famılia in Brazil. Such programs provide cashsubsidies for the poor in return for a combination of regular schoolattendance by their children and use of preventive medical care. Evi-dence shows that these programs are instrumental in reducing povertyand increasing primary and secondary school attendance, at least in theshort term.17

Another promising development is the spread ofmicrofinance. LatinAmericans have historically suffered from unequal access to financial

17 Some question whether these gains are sustainable in the longer term, since they do notnormally focus on job creation or address the quality of education. See Fernando Reimers etal., ‘‘Where is the ‘Education’ in Conditional Cash Transfers in Education?’’ UNESCOInstitute for Statistics, Montreal, 2006.


services. Only 14.5 percent of poor households in Latin America andthe Caribbean have a savings account and just over 3 percent haveaccess tocredit fromformalor semiformal financial institutions,18 limitingthe ability of the poor to accumulate assets, efficiently manage risk, orleverage their entrepreneurial skills and abilities. The growth in micro-and small-enterprise financing from private aid organizations, local andinternational governments, international institutions, and private capitalmarkets has begun to reduce this discrimination and foster job creation.Latin America’s microfinance banks currently have four million to fivemillion clients. Although access is expanding, its availability must beaccelerated to support a significant portion of the estimated fifty millionmicroenterprises in Latin America.

Individuals and families in Latin America—rather than governmentsor aid organizations—have adopted another ‘‘solution’’ to poverty:migration. As detailed below, migration within the Western Hemi-sphere has exploded in the last twenty years. While populations andcountries depend on the ‘‘pull’’ of employment, continued povertyand lack of economic opportunity have ‘‘pushed’’ many to search forwork abroad, whether in neighboring countries, Europe, or the UnitedStates. Migration has reduced pressure on the receiving local job marketwhile often providing stable income flows (in the form of remittances)to the family members who stay behind. These funds are injected intolocal economies through basic household spending, as well as at timesthrough investment in local businesses and real estate.

While many Latin American governments are dedicated to fightingpoverty and inequality, substantial barriers remain. The lack of adequatecredit and property registries, banking facilities, and industry regulationshinders financial access. While credit registries have existed for a longtime in Latin America, they often lack the information necessary toanalyze the credit records of potential customers. In many countries,property registries are not well maintained, making it hard for thepopulation to use property as collateral. There is also a lack of banking

18 Luis Tejerina et al., ‘‘Financial Services and Poverty Reduction in Latin America andthe Caribbean,’’ Inter-American Development Bank, 2006, available at http://www.iadb.org/sds/doc/POV-FSPovertyReduction.pdf.


presence in rural areas and a lack of financial literacy among the popula-tions that could most benefit from financial access. Finally, financialregulations often exclude micro-lending and discourage the expansionof private capital (alongside government and nongovernmental organi-zation [NGO] money) for small loans.

Underlying these challenges is a general lack of public resources inLatin America. The regressive nature of Latin America’s tax systemsand the informality of large sectors of the economy often mean thatthe state simply lacks the money for effective antipoverty policies. LatinAmerican tax systems rely mostly on value-added taxes (VAT) ratherthan mixes of personal, property, and corporate income taxes. Further-more, while collection rates vary, Latin American governments onaverage collect just 17 percent of GDP in taxes, compared to theOrganization for Economic Cooperation and Development (OECD)levels of 35 percent.19

The Task Force finds that addressing high rates of poverty and inequalityrepresents a critical challenge for governments in the region, one in which theU.S. government, nonprofit organizations, and multilateral institutions can playa supporting role. There are currently several hopeful ‘‘homegrown’’policy examples, including conditional cash transfers and microenter-prise and small-business loans, but the expansion of these programs andthe creation of an effective social safety net will depend both onincreasing public resources and enhancing state capacity.

U.S. Policy Today

Throughout the 1990s, trade and market opening generally dominatedtheU.S.-LatinAmerica agenda.While increasedopennesshas enhancedaggregate growth, specific programs targeting poverty remain critical.Unfortunately, poverty-oriented aid to the region, administered by theU.S. Agency for International Development (USAID), has remainedfixed at an annual $600 million for the entire region for the last decade,

19 Brazil is an exception, with tax collection nearing 40 percent of income. Unfortunately,for the issues of concern here, most of its social expenditure is earmarked regressively, formiddle- and upper-class programs such as public pensions. ‘‘Latin America Economic Outlook2008,’’ OECD, 2008, available at http://www.oecd.org/dataoecd/61/44/39563883.pdf.


putting it at roughly one-third of 1980 levels in real terms. (To putthis amount in perspective, it should be pointed out that the Mexicanand Brazilian governments each spend over $2.5 billion per year onflagship social programs.) This decline is especially notable given theincrease in funding for other initiatives, most notably those related tocounternarcotics, which now receive some $1.2 billion per year (mostlyfor drug eradication and interdiction).

The Millennium Challenge Account (MCA), President Bush’s planfor increased development assistance, does not make up for these short-comings. Since MCA grants are targeted at the very poorest nations,only seven Latin American countries qualify: agreements have beensigned with Nicaragua, Honduras, Paraguay, and El Salvador, andGuyana, Paraguay, and Peru are receiving funds as part of the MCA’sThreshold Program. But the structure of the MCA leaves millions ofdesperately poor communities, particularly in larger countries such asBrazil and Mexico, ineligible.

In 2007, the Bush administration expressed fresh concern aboutLatin America’s socioeconomic conditions, partly in response to theperceived challenge of leaders such as President Chavez. It began toemphasize the United States’ interest in ‘‘social justice’’ in its publicpronouncements when meeting with Latin American leaders and sentthe USS Comfort on a four-month tour of twelve nations in LatinAmerica and the Caribbean to provide primary medical services andassistance. President Bush announced a health care professional trainingcenter in Panama that will serve all of Central America, along withsome credit support for small- and medium-sized businesses. Unfortu-nately, the United States has not followed up with a large commitmentof new resources to other Latin American countries, in sharp contrastto the nearly $9 billion that Venezuela pledged in 2007 for financing,energy funding, and welfare programs.20

The Task Force finds that the issues of persistent poverty and incomeinequality must be better targeted by U.S. policymakers beyond the largely

20 The nearly $9 billion figure comes from Natalie Obiko Pearson and Ian James, ‘‘ChavezOffers Billions in Latin America,’’ Associated Press, August 26, 2007. It includes $1 billionworth of Argentine bonds that Venezuela pledged to buy in 2007, but does not includeanother $4billionofArgentinebonds thatVenezuela claims tohavebought in thepast twoyears.


traditional reliance on trade and democratization alone. A failure to recognizeand target these issues better will undercut broader U.S. policy objec-tives.

Public Security

Latin America presents an odd paradox: while it is one of the mostpeaceful regions in the world in terms of cross-border violence, non-state violence in various forms is both prevalent and serious. The WorldHealth Organization (WHO) ranks Latin America as the world’s mostviolent region, with a homicide rate three times the global average.Most of the region’s politically motivated civil conflicts, the scourgeof many Latin American societies from the 1960s into the 1990s, areover or in the process of winding down. But other forms of violence—ranging from that generated by drug trafficking organizations and trans-national criminal cartels to petty local crime rings and gangs—havespread alarmingly, defying predictions that economic growth and anaging population would ameliorate such problems.

According to Latinobarometro, 17 percent of all Latin Americansrate the lack of personal security as one of the most important problemsin their society (second only to unemployment), a figure that nearlydoubled between 2003 and 2006. In many countries—including Brazil,Colombia, El Salvador, Guatemala, and Venezuela—personal securityranks as the most direct challenge facing society. According to a studyjointly conducted by the IDB and universities in six Latin Americancountries, rates of violent crime and crimes against property are nowsix times higher in Latin America than in the rest of the world. Morethan four of every ten people killed by gunfire globally are killed inLatin America, even though the region accounts for less than 10 percentof the world population.

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Aside from the human toll, the economic cost of violence is stagger-ing. Measures of direct and indirect economic impact vary, but IDBstudies have put it at the equivalent of 14 percent of total GDP inLatin America. The World Bank’s World Development Report has notedthat 50 percent of businesses surveyed in Latin America said crime wasa serious obstacle to their ability to do business. The IDB has concluded,‘‘Violence is without a doubt the principal limit to economic develop-ment in Latin America.’’

In short, public insecurity could undermine progress on a varietyof other fronts if not addressed urgently and adequately. As the vicepresident of Colombia, Francisco Santos, recently stated, ‘‘Crime is thebiggest problem of the next decade. It will hinder tourism, investment,and threaten democracy.’’21 It is also a challenge that weighs heavilyon the region’s relationship with the United States. Drug productionand trafficking have long been among the defining issues of U.S.-LatinAmerica relations. More recently, given economic ties and continuingmigratory flows, the threat represented by transnational gangs has high-lighted a deepening connection between the United States and LatinAmerican security.

Ultimately, the problem of public security lies at the intersectionof a number of other problems in Latin America: poverty, economicdiscrimination, weak rule of law, corruption and impunity, and migra-tory trends.22 Addressing crime and personal security is thus crucial forthe region’s growth and stability.

Worrying Trends, Vicious Cycles

For many years, Colombia was the country most affected by violencein Latin America. The armed conflict in Colombia had political origins,but it long ago morphed into something driven far more by the drugtrade than by ideology, engulfing the country in a swirl of criminaland insurgent violence that made it one of the most dangerous countries

21 Andrew Bounds, ‘‘Violent crime called ‘biggest threat’ to Latin America,’’ Financial Times,September 19, 2006.

22 ‘‘Outsiders? The Changing Patterns of Exclusion in Latin America and the Caribbean2008,’’ The Economic and Social Progress Report, Inter-American Development Bank, 2007.

Public Security 27

in the world. In the past five years, however, murder rates have fallenby more than a third nationally, and even more in the country’s majorcities of Bogota, Medellın, and Cali, while kidnapping has been reducedbyabout80percent.The state is nowpresent inmany regionspreviouslycontrolled by illegal armed groups, reestablishing elected governments,building and rebuilding public infrastructure, and affirming the rule oflaw. The October 2007 regional elections were the least violent in thepast ten years. These substantial improvements are due to concertedefforts by the Colombian government, with assistance from the UnitedStates through Plan Colombia. Colombia still has very serious securityproblems and neither left-wing insurgency nor right-wing paramilitaryforces (both drug-fueled and extremely violent) have been eliminated,but important progress has been made.

A good portion of the rest of the region has either seen an increasein violence or is stuck at an unacceptably high level of violence. Thereis, of course, significant variation throughout Latin America. In theAndes and parts of Central America, for example, the murder rate isabove forty per 100,000 people; in the Southern Cone, outside ofBrazil, it is under ten (as compared to one per 100,000 people inindustrialized countries). A handful of countries, notably Chile, Uru-guay, and Costa Rica, have levels of crime and violence comparableto developed countries.

In Central America the increasing prevalence of violence is a causeof serious concern, even as the civil wars that plagued the region intothe 1990s have ended. Homicide rates in Guatemala and El Salvadorare higher today than they were during those countries’ civil wars;according to government statistics, the murder rate has doubled inGuatemala since 1999. The executive director of the UN Office onDrugs and Crime recently summed up the variety and magnitude ofCentral America’s security challenges: ‘‘Where crime and corruptionreign and drug money perverts the economy, the State no longer hasa monopoly on the use of force and citizens no longer trust their leadersand public institutions.’’ Three other countries also exhibit worrisometrends: Brazil, Mexico, and Venezuela. High levels of drug violenceplague both Brazil and Mexico, with drug gangs in Brazilian citiesand traffickers throughout northern Mexico threatening government


control in many areas. In Brazil in 2007, a battle between drug gangsand police in Sao Paulo turned the city into a war zone for days, leavingscores dead. That same year in Mexico, more than 2,500 people werekilled in drug violence. Urban crime in Venezuela has also increasedsignificantly in recent years; by some measures, Caracas has becomethe most dangerous city in Latin America.

The prevalence of non-state violence underscores the fact that somestates cannot effectively control or govern their national territory. Thisincludes not only remote areas such as southern and eastern Colombiaand the Brazilian Amazon, but also some poor areas of Latin America’smegacities, including the favelas of Rio de Janeiro or the ranchos ofCaracas, where the government often fails to provide the most basiclaw enforcement and judicial services. The increasing privatization ofsecurity, in manyplaces, has exacerbated this already weak state capacity,encouraging citizens to put their trust in gated communities and privatesecurity providers instead of the state’s police and judicial systems.There are, by some measures, more than half a million private securitypersonnel in Latin America today.

These problems reflect the state’s fundamental inability to maintaina monopoly over the use of force and to satisfy the basic social contractwith their citizens. This is a consequence, to some degree, of LatinAmerica’s economic inequality and widespread social exclusion: withlimited opportunities for education and legal economic advancement,youths are more likely to take up lives of crime. Weak state capacityis also in evidence: local and national governments, often underfunded,poorly administered, and plagued by corruption, have little capacity tocontrol the streetsof thecitiesand topreventpowerfulcriminalnetworksfrom taking hold.

The degree of impunity is also alarming. A study by a prominentMexican research center found that 96 percent of crimes go unpunishedin Mexico, while officials believe that 75 percent of crimes are noteven reported. InBrazil, less than 10percentof murderers are convicted.Polling consistently shows that between a quarter and half of LatinAmericans have very little trust in the police and judicial systems, whichleads to significant underreporting of crime, thereby contributing toimpunity and encouraging the kinds of vigilantism and paramilitarism

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that exacerbate the original problem. In many countries, citizens viewthe police as part of the problem, rather than part of the solution. Thisis a result, in part, of underfunding and poor management, as well asof corruption and abuses of power by law enforcement. According toLatinobarometro, in 2007, 19 percent of Latin Americans reported thatin the past twelve months either they or someone in their family hadwitnessed an act of corruption. The Global Corruption Barometer, asurvey conducted by Transparency International, consistently finds thatas many as 10 percent of Latin Americans have paid bribes in the pastmonth and ranks most Latin American countries in the bottom half ofits corruption perceptions index.

Theprison systemsofmanyLatinAmericancountries furtherexacer-bate the security problem. In many countries, prisons are notoriouslyovercrowded, make little effort at rehabilitation, and are controlled bygangs—turning petty criminals into more violent offenders who oftenbecome part of large national and even transnational criminal networks.Other concerns include public support for extralegal responses, includ-ing coercive law enforcement and interrogation techniques, vigilantejustice in countries such as Haiti, Guatemala, Peru, and Bolivia, andcontinued paramilitarism in Colombia and Brazil.

The Task Force finds that many Latin American countries, including Brazil,Mexico, Venezuela, and most Central American nations, are caught in a viciouscycle in which corruption and weak state capacity—particularly in law enforcementand judicial institutions—help to drive violence and crime. This dynamicalso threatens U.S. policy interests in reducing drug trafficking andpromoting stability in the region.

Transnational Threats

A variety of transnational threats have flourished under these conditions,and a number of them are of particular concern to the United States:drugs, international criminal cartels, gangs, and terrorism.

DrugsA considerable amount of violence in Latin America is directly orindirectly related to the drug trade. Given the amount of illicit money


involved relative to the size of the legal economies in the region, it isno surprise that the drug trade has a powerful capacity to undercut thestate. According to the UN Office on Drugs and Crime’s 2007 ‘‘WorldDrug Report,’’ Latin America produces nearly one thousand metrictons of cocaine every year, supplying the U.S. market with drugs worthmore than$60billion,aswell as significant amountsofheroin,marijuana,and methamphetamine. The sheer size of the drug trade has had amassive effect on the security situation in every country involved,especially Bolivia, Colombia, and Peru, the three primary drug-produc-ing countries; and Brazil, the Caribbean, Central America, Mexico,and Venezuela, all of which are part of trafficking routes (and plaguedby increasing drug consumption as well). Because so much of a drug’sadded value accrues during the smuggling phase, trafficking is just aslikely as production to cause violence in a country.

The stated purpose of the $5 billion aid package known as PlanColombia was to support counternarcotics efforts in Colombia, which,it was estimated at the time, supplied some 90 percent of the world’scocaine and a significant portion of the heroin that arrives in the UnitedStates. This assistance has been indispensable in contributing to thestrengthening of state institutions in Colombia. These improvementshave been critical in ensuring the Colombian state’s ability to improvepublic security for its citizens through policing power.

While the public security gains are indisputable, it is also the casethat Plan Colombia has not stemmed drug flows into the United States.Prices for cocaine and heroin are as low as or lower than ever. In thecase of cocaine, the street price of a gram is, according to both UNand U.S. government data, around a third of what it was in the 1980s,before Washington devoted billions of dollars to the war on drugs, andpurity is higher. Additionally, despite a considerable amount of aerialspraying of coca crops and record seizures of cocaine, drug productionin the Andean region has stabilized at roughly one thousand metrictons. Reductions in supply from Colombia in the last few years havebeen accompanied by increases in production in Peru and Bolivia.23

23 ‘‘World Drug Report 2007,’’ United Nations Office on Drugs and Crime, 2007, availableat http://www.unodc.org/pdf/research/wdr07/WDR_2007.pdf.

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As drug violence in Colombia has declined, it has increased signifi-cantly in Mexico. This has resulted, in part, from Mexico’s growingimportance as a trafficking route and increasing competition amongdifferent trafficking organizations. It has also resulted from expandeddrug production in Mexico, where producers create synthetic drugssuch as methamphetamine that are then trafficked to the United States.Mexico’s own security forces have proved unable or unwilling to takeon the well-funded and well-armed Mexican cartels, and in many caseshave been corrupted by those cartels. President Felipe Calderon hasmade confronting the drug problem one of his administration’s majorobjectives (and turned the task over to the military, in acknowledgmentthat Mexico’s police have been unable to make much headway), withpromises of considerable financial and technical assistance from Wash-ington. While the immediate result of Calderon’s tactics has been morefrequent interdiction, it remains unclear whether his administration willprove more able than his predecessor’s in controlling the problem,especially given the value of drug profits that flow into the cartels’ hands.

Security assistance to Mexico this decadehas been inadequate.WhileColombia received over $500 million each year from 2000–2007,Mexico received less than $40 million annually. The Merida Initiativeproposed by the Bush administration in October 2007 addresses thisissue by proposing a $1.4 billion assistance program over the next threeyears (which includes modest sums that would go to Central America).While the initiative recognizes the need for greater investment inpromoting rule of law and security on both sides of the border, itsinitial focus on hardware means that it may not do enough on themore important issue of institution-building and strengthening, animportant success of Plan Colombia.

Drug consumption, long viewed as confined to the United States,has also been on the rise in many Latin American countries, creatingan increasingly worrisomepublic health problem, as well as contributingto an upsurge in both petty and more serious crime. Cocaine consump-tion has also expanded in Europe. Of the one thousand metric tonsproduced each year in the region, slightly more than half is now boundfor areas other than North America.

U.S. policy focuses primarily on eradication and interdiction in thesource countries, but studies show that growers in producing countries


respond rapidly to U.S. pressure by growing more than the marketdemands, knowing that some of their product will be destroyed orseized. Since substantial value added to illegal drugs is in trafficking,losing a percentage of the product early in the process does not implysignificant economic loss for drug cartels. It is estimated that everydollar put into domestic U.S. enforcement is three times more effectivein reducing U.S. consumption than a similar investment in decreasingproduction in the source country. This is particularly true for newlypopular drugs with expanding markets, such as methamphetamine.For drugs with more ‘‘mature markets’’—such as cocaine—domesticenforcement is not as useful, as dealers are rapidly replaced and addictsaregenerallywilling topayanyprice to satisfy their addiction.Treatmentand rehabilitation are more cost-effective than either domestic lawenforcement or source country eradication and interdiction.24

The TaskForce finds that the drug trade flourishes from a volatile combinationof negative socioeconomic conditions in producing and trafficking countries coupledwith high demand for narcotics in the United States and Europe, and increasinglyin Latin America itself. Effectively fighting the drug trade will requirenot only supply eradication and interdiction efforts, but also policies inLatin America that address underlying conditions and weak governancethat allows the trade to thrive. As important, U.S. and European policiesmust target the demand for drugs in their countries, which createmarkets lucrative enough to overwhelm even well-funded and well-designed security and eradication efforts.

New Threats to the United States? Gangs and TerrorismMuch of the recent interest about transnational threats in Latin Americastems from concerns that the region may serve as a base or breedingground for terrorist organizations. This fear was highlighted when someof the people involved in an incipient terrorist plot at John F. Kennedyairport in New York were found to have come from Guyana andTrinidad and Tobago. Attention has also focused on the triborderarea where Argentina, Brazil, and Paraguay meet, which is home to

24 Jonathan P. Caulkins, ‘‘How Goes the ‘War on Drugs’?: An Assessment of U.S. DrugProblems and Policy,’’ RAND Drug Policy Research Center, 2005, available at http://www.rand.org/pubs/occasional_papers/2005/RAND_OP121.pdf.

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considerable criminal activity and relatively low levels of governmentcontrol. There is some evidence that Hezbollah has had a limitedpresence in the area for purposes of money laundering, but there is nostrong evidence thus far that Middle East terrorist operatives have hadmuch success making inroads into Latin America. Similarly, althoughHugo Chavez’s ties with Iran and provocative statements about theUnited States have raised concern in many quarters, there is littleevidence that Venezuela currently presents a haven for Islamic terrorism.Nonetheless, as Admiral Stavridis, Commander of the U.S. SouthernCommand, expressed toCongress earlier this year,whilenarcoterrorism(addressed below) is a constant struggle for the region, ‘‘Islamic radicalterrorism is a much less immediate force in the region, but it has thepotential to become of greater concern to us.’’

More immediately relevant are transnational gangs that have beenflagged as a serious emerging threat to hemispheric security. The twomost prominent and dangerous gangs, the M-18 and the MS-13, havesomewhere between 50,000 and 100,000 members distributed amonga number of Central American countries (especially Guatemala, ElSalvador, and Honduras) and the United States. The CongressionalResearch Service recently reported that more than 1,300 members ofthe MS-13 have been arrested in the United States in the past two andahalf years.Bymanyaccounts, theoriginof transnational gangs stemmedfrom the release of tens of thousands of criminals, deported from theUnited States to Central American nations, where often the receivinggovernments were uninformed of the criminal background of thedeportees, leaving their judicial and prison systems unable to controlthem.

State agencies in Central America and the United States have madea concerted effort to understand and address the threat. In 2004 theFBI created a special task force on gangs, which works with CentralAmerican governments. The State Department, Department of Home-land Security (DHS), the U.S. Agency for International Development,and the Department of Justice have also developed initiatives thatsupport and work with Central American governments on gang-relatedissues and threats. The IDB and USAID have funded a variety of youthand educational programs in an effort to dissuade Central American


youth from gang involvement. There have also been meetings betweenlocal law enforcement officials in the United States and their CentralAmerican counterparts to facilitate coordination and informationsharing.

The threat posed by transnational gangs should not be overstated,as it has been in some of the more tendentious analyses of the problemin recent years. The UN Office on Drugs and Crime has found that,while gangs in Central America ‘‘represent a source of criminality, theydo not appear to be responsible for a particularly disproportionate shareof the murders in the countries where they predominate. Their rolein drug trafficking . . . is also dubious.’’25 Still, the gangs do contributeto already high rates of crime and further undermine weak governancein severalCentralAmericancountries; ifnotmetwitheffectiveanticrimestrategies inLatinAmerica andcontinuedcoordinationbetweenCentralAmericangovernments and theUnitedStates, suchgangs couldbecomean increasingly problematic threat to security and stability.

The Task Force finds that the United States must be vigilant toward emergingthreats without letting them hamper U.S. policy in other critical areas. Inaddition, claims that terrorists are using Latin America as a launchingpad for attack on the United States are thus far unfounded.

Cross-border Threats

Cross-border threats among countries of the region are much dimin-ished today, thanks to the end of military governments in the region,relatively low levels of defense spending, few significant external threats,the settling or tabling of most major border disputes, the influence ofthe United States and other members of the international community,and improving mechanisms for regional cooperation through the OASand other regional and subregional bodies. Of concern, however, areVenezuela’s international arms purchases, which increased from anestimated $71 million between 2002 and 2004 to $4 billion between2005 and 2007, expenditures not included in the country’s official

25 ‘‘Crime and Development in Central America: Caught in the Crossfire,’’ United NationsOffice on Drugs and Crime, May 2007.

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military budget.26 While aggregate defense expenditures in LatinAmericaremainamongthe lowest regionally in theworldasapercentageof GDP, such substantial Venezuelan increases should be watched.

In addition, the March 2008 crisis following a Colombian strike onacampbelongingtotheterroristgroupFARCinEcuadorianterritory—whichkilledRaulReyes, theFARC’s second-in-command—indicatesthe persistence of destabilizing forces in the region. The Colombiangovernmentdescribed the strike as self-defense;PresidentChavez,Presi-dent Correa, and several other heads of state rushed to condemnColombia’s actions. In what soon became the tensest diplomatic crisisthe Andes had experienced in decades, Ecuador cut relations withColombia, and both Ecuador and Venezuela expelled the Colombianambassadors from their capitals and mobilized their armed forces to theColombian border.

Peaceful resolution of the crisis at the Rio Summit in the DominicanRepublic showed, on the one hand, the importance of institutionaland legal mechanisms for security cooperation and dispute resolution,especially thoseunder theOAS.But asageneralmatter suchmechanismsremain weak, and improving and deepening them will be criticalto averting such crises in the future. Other forums for regional andsubregional cooperation, though not specifically dedicated to securitycooperation(suchasMercosurand theCommunityofAndeanNations),have been beneficial in reducing and managing interstate tensions.Otherproposedor incipient security forums, suchas theSouthAmericanDefense Council and the Ameripol regional police force, could alsoplay a positive role. Signed in 1967, the Treaty of Tlatelolco has, sofar, succeeded incommitting theentireLatinAmerican region to remainfree of nuclear weapons. While these mechanisms, taken together, donot provide an especially robust regional system for managing interstateconflict, they do comprise a system of norms and practices aimed atresolving such disputes—and offer a platform on which to build.

While Colombia’s cross-border raid led to a regional diplomaticcrisis, it also brought to the surface the concerns of many of the region’s

26 ‘‘The List: The World’s Biggest Military Buildups,’’ Foreign Policy, November 2007,available at http://www.foreignpolicy.com/story/cms.php?story_id�4051.


governments apart from Colombia—includingArgentina,Brazil,Mex-ico, Panama, and Peru—over the persistence of the FARC and possibleefforts by regional actors to abet and prolong the FARC’s destabilizingpresence. The Colombian government has alleged that it found threelaptop computers at the site where Reyes was killed that containedevidence of support for the FARC by the Venezuelan and Ecuadoriangovernments. The alleged support included a $300 million fund thatChavez’s government was going to set up for the FARC and acceptanceby the Ecuadorian government of the FARC’s presence in Ecuadorianterritory. If authenticated by Interpol, the information obtained fromseveral hard drives in the coming months may substantiate allegationsof deliberate support by Venezuela for the FARC, which the UnitedStates, the European Union, and Canada consider a terrorist organiza-tion. The Colombian government also found thirty kilograms ofdepleted uranium near Bogota that it claims were going to be deliveredto the FARC, raising fears that the FARC has an interest in obtainingnuclear material.

Even as the Colombian Armed Forces continue to weaken theFARC militarily and psychologically, the incident exposed the FARC’scontinuing pursuit of international ties and highlighted the need forgreater regional cooperation to put an end to the region’s longest-standing insurgent group. The Task Force finds that the regional dimensionsof the Colombian conflict remain significant and require greater discipline andcooperation among Latin American countries in order to successfully tackle theshared challenge posed by violent criminal syndicates and insurgent groups thatthriveonweak institutionsand contraband todestabilizegovernments in the region.

Also troublesome is the vast number of mostly unregistered gunsin the region. In Central America, estimates range from two millionto four million (many left over from earlier civil wars and conflicts),with less than 800,000 registered with the government. The UnitedStates is another important source of illegal firearms and sophisticatedweaponry. Over 10 percent of U.S. gun shops are located near theMexican border and these businesses sell on average twice the numberof arms than their counterparts more distant from the border.

Smuggling guns into Mexico, a country with strict gun laws, canbe a profitable venture: an AK-47 worth $500 in the United States

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can be sold for as much as $1,500 in Mexico.27 While Mexico has only6,000 legally registered guns in the country, every year the governmentconfiscates between 5,000 and 10,000 illegal firearms, more than 90percent of which are traced to the United States. Between January andOctober 2007 the Mexican government seized 6,000 weapons, 470grenades, and 552,000 rounds of ammunition.28 Reflecting the plentifulsupply of guns in the country, criminals have recently been leavingtheir weapons at the crime scene.

International drug trafficking organizations derive their power notonly from powerful weapons, but also from drug money comingfrom the United States and other consuming countries. The DrugEnforcement Administration (DEA) estimates that Mexican andColombian drug trafficking organizations launder between $8 billionand $25 billion every year. Much of this comes from sales throughoutthe United States, where profits are transferred to border towns (pre-dominantly through wire transfers) and then transported out of thecountry, usually through bulk cash smuggling across the southern bor-der. Once the money is in Mexico, it is stashed for future financingof international criminal organizations, moved further south, depositedin currency exchange houses or banks, or transported back to theUnited States via armored car or courier service. This sophisticatedsmuggling system allows criminal organizations to claim the funds aslegitimate deposits in banks and makes it hard to trace the funds todrug trafficking. The Mexican attorney general estimates that approxi-mately $10 billion of laundered Mexican drug money ends up in U.S.banks every year.

These laundered funds and smuggled weapons sustain and reinforcethe power of international criminal organizations, assisting them incompromising or overwhelming Latin American governments. TheTask Force finds that transnational crime is aided by the widespread availabilityof handguns and small arms, and ready funding from the lucrative drug trade.

27 Sam Logan, ‘‘Guns: The Bloody U.S.-Mexico Market,’’ ISN Security Watch, October31, 2007, available at http://www.isn.ethz.ch/news/sw/details.cfm?id�18300.

28 Manuel Roig-Franzia, ‘‘U.S. Guns Behind Cartel Killings in Mexico,’’ Washington Post,October 29, 2007, available at http://www.washingtonpost.com/wp-dyn/content/article/2007/10/28/AR2007102801654.html.


Regional cooperation is critical for effective responses, as illegal non-state organizations and criminal networks do not operate within orrespect national or international borders.

Integration through Migration

Over one hundred million Latin Americans have left their homes sinceWorld War II. While three-quarters of Latin American migrants todaymove to the United States, there is also significant migration to otherregions and within Latin America itself. The volume of such movementhas been a primary force in the integration of the Western Hemispherein recent decades, reshaping economies and societies in the process.Public policy has failed to keep up.

About forty-five million Latinos currently live in the United States,eighteen million of them foreign born.29 Central Americans and Mexi-cans make up 71 percent of this total; people from the Caribbean(mostly from the Dominican Republic, Haiti, and Cuba) 18 percent;and South Americans (primarily from Colombia, Ecuador, and Peru)11 percent. In some cases, this represents a sizable portion of the sendingcountry’s population: the eleven million Mexicans in the United States,for example, comprise roughly 10 percent of Mexico’s population and15 percent of its labor force. El Salvador, Guatemala, and Hondurashave one million, 750,000, and 400,000 of their respective nationalsliving in the United States, representing 35 percent, 19 percent, and15 percent of their respective labor forces.30

29 For the purposes of this report, the term Latinos will be used to refer to both LatinAmericans and their descendants living in the United States.

30 El Salvador’s labor force is 2.865 million, Guatemala’s is 3.958 million, and Honduras’sis 2.489 million. The World Factbook 2008, Central Intelligence Agency, available at https://www.cia.gov/library/publications/the-world-factbook/index.html.

39


The U.S. workforce, meanwhile, has become increasingly depen-dent on these workers. Between mid-2005 and mid-2006, Latinosaccounted for 37 percent of the total increase in workers in the UnitedStates. They now account for around 13 percent of the U.S. laborforce, and more than a quarter of the labor force in states such asArizona.31 They represent 41 percent of total employment in farming,fishing, and forestry, 25 percent in the construction sector, and 28percent in cleaning and maintenance.32 While legal migrants are evenlysplit between males and females, some 60 percent of illegal migrantsare men. These workers tend to be poorer and less educated thannative-bornAmericanworkersormigrants fromotherregions.Seventy-nine percent of Asian migrants and 87 percent of African immigrantsover age twenty-five have completed high school, compared to only44 percent of Latin American migrants over age twenty-five. As aresult,LatinAmericanmigrantsgenerally enter into lower-skilled sectorsof the U.S. economy. Although the issue is much debated, most analystsfind the net economic impact of immigrants on the U.S. economymodestly positive. The U.S. Council of Economic Advisers has foundthat immigrants ‘‘have an overall positive effect on the income of native-born workers,’’33 largely because immigrants, when arrayed by yearsof schooling, are concentrated at the extremes of the education ladder,complementing U.S. workers who are grouped in the middle of thespectrum.

Migration within Latin America is also significant and accelerating.Official statistics put the number of Latin Americans living outside oftheir home countries but within the region at five million, but consider-able evidence suggests that the real number is much higher, as porousborders, informal economies, and understaffed bureaucracies maketracking difficult. Argentina, Costa Rica, and Venezuela are the primarydestinations. Argentina is home to significant numbers of Bolivians,

31 ‘‘Arizona: Population and Labor Force Characteristics 2000-2006,’’ Pew Hispanic Center,January 23, 2008, available at http://pewhispanic.org/files/factsheets/37.pdf.

32 Ibid. and Rakesh Kochhar, ‘‘Latino Labor Report, 2006: Strong Gains in Employment,’’Pew Hispanic Center, September 27, 2006, available at http://pewhispanic.org/files/reports/70.pdf.

33 ‘‘Immigration’s Economic Impact,’’ Council of Economic Advisers, June 20, 2007,available at http://www.whitehouse.gov/cea/cea_immigration_062007.pdf.


Chileans, and Paraguayans; Costa Rica to as many as 500,000 Nicara-guans; andVenezuela to several hundred thousandColombians.Bolivia,in contrast, has lost some two million people—20 percent of its popula-tion—to migration in recent years. Recent evidence also suggests thatthe composition of such migration within Latin America is changing,with a growing portion of skilled migrants leaving for other countriesin the region. Around half of migrants to Chile, Mexico, and Panamahave twelve or more years of schooling.

In prior decades Latin Americans often migrated in response topolitical upheaval or violent conflict. Today, migration is mostly drivenby economics. The U.S. minimum wage, at close to seven dollars perhour, is six to seven times that of Mexico’s, which is, in turn, higherthan that of most of Central America. U.S. per capita GDP is over$43,000, compared to Mexico’s $11,000, El Salvador’s $5,500, andGuatemala’s $4,300. There is also great demand for Latin Americanimmigrant workers in theUnited States: the foreign-born Latino unem-ployment rate in the second quarter of 2006 was 3.9 percent, identicalto that for non-Latino white population born in the United States.34

The same dynamic holds for migration within Latin America: CostaRica’s GDP, for example, is more than four times that of Nicaragua,helping to account for the numbers of Nicaraguans working in CostaRica. One additional factor in determining migration patterns is existingnetworks of migrants: established family or community ties from previ-ous waves of migration arrange housing, employment, and generalsupport and thereby facilitate continued flows even when economicincentives decline.

The Task Force finds that demographic trends, economic opportunity, andestablished immigrant networks are the primary causes of current migratory trends,encouraging men and women to search for better opportunities abroad. As longas these underlying factors hold, substantial migration within the regionand from the region to the United States will continue, even in theface of restrictive immigration policies.

34 Ibid.


Remittances and Circular Migration: EconomicDevelopment Tools?

Remittanceshavebecomeacritical sourceof income formanydevelop-ing countries. In 2007, over $66.5 billion was remitted to Latin Americaand theCaribbean, about three-quarters ofwhichcame fromtheUnitedStates.35 This is equal to 80 percent of all foreign direct investment in theregion. Mexico received the largest cross-border flows—approximately$24 billion—while remittances to El Salvador and Honduras exceeded20 percent of national income. In the United States, 73 percent ofadult Latin American immigrants—some thirteen million people—regularly send remittances to family members in their countries oforigin, and about 10 percent of the aggregate $500 billion these workersearn each year is thought to go toward remittances. More than half ofthese remittance-senders are younger than thirty-five, and almost two-thirds are considered ‘‘working poor’’ or ‘‘lower middle class’’ by U.S.standards, with annual incomes of less than $30,000.

While some researchers worry that remittances lead to a cycle ofdependency, most think that remittances can play a positive role inLatin American development. According to a prominent study of thosein Latin America who receive remittances, 80 percent spend the fundson food,48 percent on medication, 38 percent oneducation, 13 percenton mortgage payments, and 9 percent on savings.36 Even expenditureson basic household goods can bolster local economies.37 But moreimportantly, studies indicate that children from families receiving remit-tances are significantly more likely to remain in school, regardless ofthe educational level of the parents, a critical factor in development.38

35 ‘‘Remittances 2007: A Bend in the Road or a New Direction?’’ Inter-American Develop-ment Bank, March 2008, available at http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum�1381109.

36 Orozcoet al. ‘‘TransnationalEngagement,Remittances andtheirRelationship toDevelop-ment inLatin America and the Caribbean:Final Report,’’ Institute for the Study of InternationalMigration at Georgetown University, July 2005, available at http://isim.georgetown.edu/Publications/LindsayPubs/Rockefeller%20Report.pdf.

37 David Seddon, ‘‘South Asian remittances: implications for development,’’ ContemporarySouth Asia, Vol. 13, No. 4, December 2004, available at http://www.ingentaconnect.com/content/routledg/ccsa/2004/00000013/00000004/art00005.

38 Ernesto Lopez-Cordova, ‘‘Improving health and education,’’ ID 21 Insights, Vol. 60,January 2006, available at http://www.id21.org/insights/insights60/art02.html.


Some remittances are also channeled into productive investments, suchas start-up capital for small businesses, a particularly positive use offunds.39 A2001 study showed that almost one-fifthof thecapital investedin microenterprises in rural Mexico came from U.S. remittances.40 Arecent study by Bendixen and Associates states that in Mexico today,nearly 40 percent of remittance funds is going toward investment (thefigure is32percent forColombiaand25percent forGuatemala).41 Theseexpenditures should have significant macro-level effects over time.

Anotherpotentiallypositive factor fordevelopment isnonpermanentmigration. Advances in communications and travel enable more ‘‘circu-lar migration,’’ in which people migrate for shorter periods of time ormove back and forth repeatedly. In Latin America, such continuousmigration has become an increasingly common strategy in the past sixdecades to increase and diversify family income. In the long term, italso means that migrants return to their home countries with newfinancial and human capital. For example, returning migrants are,according to recent research, more likely to engage in entrepreneurialactivity. Mexicans who return from a seasonal agricultural workersprogram in Canada have been documented to invest in land andsmall businesses at home.42 There is also evidence that Salvadorans andDominicans start microenterprises upon returning from the UnitedStates.43 Circulatory migration could have a particularly positive impactif extended to highly educated migrants. Although some have arguedthatLatinAmerica isharmedby theemigrationofhighly skilledworkers,recent research on China and India demonstrates that countries can

39 Ibid. and Richard H. Adams Jr., ‘‘Remittances, Poverty, and Investment in Guatemala,’’in International Migration, Remittances, and the Brain Drain, edited by Caglar Ozden and MauriceSchiff (Washington, DC: World Bank; New York: Palgrave Macmillan, 2006).

40 Christopher Woodruff and Rene Zenteno, ‘‘Remittances and Microenterprises in Mex-ico,’’ Working Paper, Center for U.S.-Mexican Studies, University of California, SanDiego, 2001.

41 Presentation to World Bank Representatives, Bendixen and Associates, January 14, 2008.42 Tanya Basok, ‘‘Mexican Seasonal Migration to Canada and Development: A Community

based Comparison,’’ International Migration, Vol. 41, No. 2, 2003.43 Jose Itzigsohn, Carlos Dore Cabral, and Esther Hernandez Medina, ‘‘Mapping Dominican

Transnationalism: Narrow and Broad Transnational Practices,’’ Ethnic and Racial Studies, Vol.22, No. 2, 1999, and Patricia Landolt, ‘‘Salvadoran Economic Transnationalism: EmbeddedStrategies for Household Maintenance, Immigrant Incorporation, and Entrepreneurial Expan-sion,’’ Global Networks: A Journal of Transnational Affairs, Vol. 1, No. 3, 2001.


actually benefit from the migration of highly skilled professionals—producing ‘‘brain circulation,’’ by which returning migrants bringhuman capital and technology with them, rather than causing ‘‘braindrain.’’44 Technological advances suggest newpotential forLatinAmeri-cancountries if theycan secure the returnof increasingly skilledmigrants.However, restrictive immigration laws that bar immigrants from travel-ing freely back and forth and changing labor markets that provide morepermanent year-round employment may be diminishing the potentialbenefits of migration.

The Task Force finds that migration and remittances benefit Latin Americanhouseholds by increasing disposable income and investment, but could prove riskyin the long run if those with skills emigrate permanently. Domestic andinternational policies that promote circular migration and productiveinvestmentof remittancescanmaximize thepositive impactofmigrationfor sending countries.

Latin American Policy Responses to Migration

Latin American nations understand that the flow of goods and peopleare inextricably linked. As a result, efforts at economic integration havebeen matched with efforts at managing and facilitating immigration,with new domestic laws and new bilateral and multilateral migrationaccords. The Andean Community of Nations, for example, sees theunhampered movement of people as essential to forming an AndeanCommon Market. The participating countries have worked on suchmeasures as developing complementary social-security arrangementsamong the participating countries, so that workers can be credited forpayments made anywhere in the Andean Community. The Mercosurcountries (Brazil, Argentina, Uruguay, and Paraguay) have also signeda Multilateral Agreement on Social Security to guarantee rights to allMercosur residents in the subregion. A Mercosur Visa was approvedin 2003, though it has yet to be implemented.

Argentina, the South American country that receives the greatestnumber of immigrants, has undertaken additional initiatives on its

44 David Zweig et al., ‘‘Globalization and Transnational Human Capital: Overseas andReturnee Scholars to China,’’ China Quarterly, Vol. 179, 2004.


own to address immigration flows. In 2003, it incorporated Mercosurlegislation prohibiting discrimination based on national origin and guar-anteeing increased access to health care and education. It has also signedbilateral migration agreements and memoranda of understanding withBolivia and Peru to facilitate circular migration. Mexico, meanwhile,has adjusted its policies for the hundreds of thousands of U.S. retireeswho have migrated south in recent years. For example, it now providesvisas specifically for foreign retirees that give access to Mexico’s healthcare system for a $300 annual premium. It also changed its laws toallow foreigners to own land outright rather than in trust, as pre-viously required.

At the same time, in the absence of bilateral and multilateral agree-ments that apply to U.S.-bound migration, Latin American govern-ments have begun developing their own policies, particularly focusedon ways to encourage circular migration and remittance flows. Whileonly four Latin American countries recognized dual citizenship in 1990,at least eleven countries do now. Colombian expatriates are allowedto elect representatives to the Colombian legislature; Dominicans canrun for office in the Dominican Republic even when their primaryresidence is abroad; and Peruvians and Mexicans can now vote inelections in their countries of origin from abroad. Many governmentshave also started programs to encourage migrants to invest in theirhome countries and eventually return. Colombia and Uruguay haveestablished incentives for returnee scholars and scientists. The Mexicangovernment established the Program for Mexican Communities LivingAbroad, which offers health, education, and legal advice to migrants andhometown organizations and encourages remittances for developmentprojects. Some Mexican states have also established matching funds sothat remittances intended for development projects are matched bystates and cities. The Salvadoran government now has a Vice Ministryof Foreign Affairs for Salvadorans Abroad, whose vice minister helpsmigrants abroad and facilitates their return.

The Task Force finds that Latin American governments are pushing forwardconcrete policies to address the accelerating movement of people within the regionas well as capitalize on migration to the United States. These efforts by LatinAmerican governments help maintain ties between migrants and their


countries of origin, and certain policies encourage migrants to remitand eventually return to their countries of origin. U.S. policies lag farbehind those of Latin American governments in adapting to the realitiesof increased human mobility.

U.S. Immigration Policy

In 2006, the U.S. government authorized approximately 1.3 millionimmigrant visas, including approximately 800,000 for family-sponsoredimmigrants and 160,000 for employment-based immigrants. About300,000 others received visas for other reasons, such as refugee andasylee status. That year, just over 800,000 people adjusted their migrantstatus and became legal permanent residents. As is often noted, theUnited States has always been a nation of immigrants. Immigrationlaws, however, have varied dramatically over time, from the fairly openpolicies of the nineteenth and early twentieth centuries to, starting inthe 1920s, more restrictive policies based on national quotas and aimedat limiting immigration, especially from Asia and eastern and southernEurope.Since1952, fourprinciples haveguidedU.S.policy: the reunifi-cation of families; the admission of immigrants with needed skills; theprotection of refugees; and the diversity of admissions by countryof origin.

Immigration policy in the United States today is characterized bystringent lawsandweakenforcement. In1986, the ImmigrationReformand Control Act (IRCA) provided amnesty to illegal immigrants whohad entered the country before January 1, 1982, and criminalized thehiringof illegalworkers, for the first timeputting theonuson employers.But the law was not enforced and did not deter employers from hiringillegal immigrants. After the terrorist attacks of September 11, 2001, thefederalgovernmentrestructured the immigrationbureaucracy, replacingthe Immigration and Naturalization Service, which was part of theJustice Department, with Immigration and Customs Enforcement, abranch of the newly formed Department of Homeland Security. Thischange, which combined an antiterrorism mandate with responsibilityto control U.S.-bound migration, resulted in increased resources forborder patrols and surveillance equipment. All together, current policies


create substantial impediments for legal migration. As a result, theyencourage Latin Americans (and others) to enter the United Statesillegally. And once they are in the United States, immigrants are morelikely to stay, since getting into the country is expensive and risky.There are roughly twelve million illegal immigrants in the UnitedStates today.

The overhaul of immigration policy proposed in 2007 would haveprovided a means for legalization of these immigrants. It also wouldhave eliminated the system that prioritized family unification for onebased on points that reflected skills, English proficiency, family ties, andU.S. economic needs. It would have established a larger guest workerprogram as well as increased border security. Employers would havebeen held responsible for verifying workers’ legal status. But despite amajor push by the Bush administration and support from major figuresinbothparties, theproposal didnotwithstandpolitical furororquestionsover how effective it would have been in controlling immigration ordiscipliningemployers.With the failureof reformlegislation inCongressin 2007, and the fact that no new attempt at comprehensive reform islikely until after the 2008 presidential election, state and local govern-ments have increasingly been creating their own policies to handleimmigrants—in some cases going out of their way to welcome immi-grants, in others seeking to be more restrictive. Despite the fact thatsome of these policies have been found unconstitutional, this trend islikely to continue.

The failures of U.S. immigration policy affect national security,economic growth, and foreign relations. The status quo fails even tomeet the most basic objective of guaranteeing proper documentationof visitors and noncitizen residents. It concentrates almost solely on theU.S.-Mexico border, despite the fact that nearly half of unauthorizedworkers in the United States enter legally through other ports andoverstay their visas. It also fails to address the fact that, with historicallylow unemployment rates and an aging population, the United Stateswill need more workers to fill (and keep) jobs within the domesticeconomy. This labor shortage will only become more acute in thecoming decades, as baby boomers retire. To maintain GDP growth,a sizable number of migrant workers will be needed across all skill levels.


Finally, the failures of U.S. immigration policy have become aforeign policy problem. In the United States, immigration is largelyconsidered a domestic policy issue. But given the profound impact thatU.S. immigration policy has on many Latin American nations, it isnaturally considered a vital issue in their relations with the UnitedStates. The tenor of recent immigration debates and the failure to passmeaningful immigration reform have hurt U.S. standing in the region,as many Latin American nations (including those without large popula-tions in the United States) perceive current laws as discriminatory andunfair toward their citizens.

The Task Force finds that comprehensive immigration reform is necessaryto create a system that better meets U.S. security, economic, and foreign policyinterests, and must be a priority for the next administration. A system thatoffers incentives to migrate legally, to work hard and gain skills whilein the United States, and to return to the countries of origin eventuallywith the acquired capital and skills would not only benefit the UnitedStates, it would also foster economic and political development inLatin America.

Energy

U.S. anxieties over dependence on foreign energy resources are usuallycentered on the Middle East, but the United States relies on thewesternhemisphere (includingCanada) fornearlyhalf its oil.45 Recently,resurgent resourcenationalism,productionbottlenecks, and thepolitici-zation of energy trade have raised concerns that Latin America maybecome a less reliable supplier and drive up global energy prices. Atthe same time, the region presents abundant opportunities for newinvestment in traditional and alternative energy resources—making itcritical that U.S. and Latin American governments both confront theenergy challenge and seize the opportunity of greater cooperation.

Traditional Energy Supplies: Stalling Production andIntegration

Latin America provides nearly 30 percent of the United States’ foreignoil. Mexico—which, via its state oil company Petroleos Mexicanos(PEMEX), has about 1 percent of known world oil reserves andproduces some 3 million barrels a day—is the United States’ third mostimportant petroleum source, following Canada and Saudi Arabia. Itcurrently accounts for 11 percent of U.S. oil imports. However, risingdomesticdemand,decliningproductivity, anddepletedreserves threatenthe country’s position as an energy-exporting nation. The Cantarell

45 ‘‘U.S. Imports by Country of Origin,’’ Energy Information Administration, available athttp://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm.

49


oil field is facing sharp declines in production, and new exploration ishampered by inadequate investment. Over 60 percent of PEMEX’srevenues go to the government’s budget, and private and/or foreigninvestment in the oil sector remains largely prohibited (in accordancewith the Mexican Constitution), leaving only limited opportunities forforeign participation. In the short term, it remains unlikely that thedivided Mexican Congress will approve private sector investment,46

and even if the reformist Calderon government is able to loosen currentinvestment restrictions, new production would take years to comeonline. Without significant changes, some analysts predict, Mexico maybecome a net importer of oil in as few as ten years. For the UnitedStates, this development would impel a dramatic and difficult shift inenergy sourcing.

There are some positive trends in the U.S.-Mexico energy relation-ship as well, however. Energy integration in North America has pro-ceeded. Extensive cross-border networks of modern pipelines andpower lines, tariff-free trade across borders, technology sharing, andconstant contact between energy officials in both countries have facili-tated fluid commerce and constant dialogue. The North AmericaEnergy Working Group (NAEWG), an organization of midlevel careerenergy officials from Mexico, the United States, and Canada establishedin2001,has sponsored severalvaluable regional energy studies, compiledstandardized energy statistics, and begun to reach out to various publicand private stakeholders in relevant industries.

Venezuela, the ninth-largest producer of oil in theworld, the fourth-largest supplier to the United States, and the location of 6.6 percent ofthe world’s proven reserves, also faces challenges. Since 2001, PresidentChavez has sought to use his nation’s vast energy wealth for publicprograms and for his own ambitions by strengthening governmentcontrol over the state-owned oil company Petroleos de Venezuela(PDVSA), limiting foreign ownership of joint ventures, and demandinghigher royalty payments from foreign oil companies. Riding a waveof high prices, Venezuela has devoted much of its oil revenues tofunding government programs and foreign policy initiatives—by

46 David Shields, ‘‘Pemex en el Contexto de su Crisis de Reservas y Produccion,’’ ForeignAffairs en Espanol, July-September 2007.

Energy 51

directly subsidizing supplies to sympathetic nations, especially in CentralAmerica and the Caribbean—rather than robust reinvestment. Whilethese choices may boost Chavez’s domestic popularity and win himregional allies, they have diminished PDVSA’s efficiency and led toproduction declines. In response to the Chavez government’s demandsfor a majority stake in all joint oil ventures, a number of privatemultinationals have curtailed further investment in the exploitation ofdifficult-to-access, but potentially lucrative, crude reserves, while othershave decided to close operations altogether. Joint ventures with state-owned companies from China, Iran, Brazil, and other nations mayhelp to fill this void, but flat midterm production prospects coupledwith rising internal demand are likely to limit export increases (andperhaps lead to declines) in the coming years.

Given the importance of Venezuela as a supplier, any decline inexports would have problematic implications for the United States.President Chavez has also repeatedly threatened to divert significantportions of Venezuela’s U.S.-bound oil to China. However, existingsymmetries and low transportation costs between Venezuelan heavycrude production and U.S.-based refineries make such a dramatic shiftunlikely in the short run. In fact, even though Venezuelan productionhas fallen since 2001, oil exports to the United States have remainedrelatively stable (with theexceptionof a two-month strike in2002–2003during which the oil sector virtually shut down).47

Ecuador and Brazil are or could be other important sources of oilfor the region and for the United States. In Ecuador, political turmoilandresurgent resourcenationalismhavecreatedanuncertain investmentenvironment. Relations with Washington have been particularly tensesince thegovernment tookover theoperationsofOccidental PetroleumandRafaelCorreawaselected in2006.Brazilhas steppedupexploration,thanks in largepart to theexpertiseof state-controlledPetroleoBrasileiro(Petrobras) and friendly terms offered to foreign investors. The recentTupi oil find—estimated at five billion to eight billion barrels—couldplace Brazil ahead of Canada and Mexico in terms of reserves, second

47 ‘‘Energy Security: Issues Related to Potential Reductions in Venezuelan Oil Production,’’UnitedStatesGovernmentAccountabilityOffice, June2006, available at http://www.gao.gov/new.items/d06668.pdf.


only to Venezuela in the hemisphere. Other as-yet-unmeasured discov-eries may bolster Brazil’s reserves even further. Largely energy self-sufficient already, an increase in Brazilian oil exports could substantiallybenefit not only Brazil but also the United States.

Latin America’s natural gas resources also have the potential to playan important part in U.S. energy security in the coming years. TheUnited States is currently able to meet most of its natural gas needs.But owing to the environmental advantages of natural gas and cost-saving improvements in liquefied natural gas (LNG) processing andtransportation,demandwill likely increaseconsiderably—by0.6percenta year from 2004 to 2030, according to the Energy Information Admin-istration’s International Energy Outlook 2007—which U.S. and Canadiansupplies will be unable to meet. With reserves equal to those of NorthAmerica, South America’s natural gas market will become an importantforeign energy source.

Peru is already set to take advantage of these developments, withlong-awaited LNG exports from the Camisea reserves in the south setto come online, and several commitments for Peru to export LNG tothe U.S. West Coast and Mexico already in place. In other places,however—Bolivia, most notably—political turmoil is thwarting thepotential of greater natural gasproduction andexport. PotentialBolivianexports to Chile and the United States have been held up by anti-Chilean sentiment and resource nationalism. (The protests that followeda 2003 investment and export proposal helped bring down a president.)Bolivia’s 2006 nationalization caused problems for importers, especiallyBrazil and Argentina, and the uncertain operating environment hasbrought new investment in the natural gas sector to a halt. Otherregional energy integration proposals, such as the Gasoducto del Sur,an over 9,000-kilometer pipeline linking future Venezuelan natural gasfields to markets in Brazil, Argentina, Paraguay, Uruguay, and perhapseven Chile, have also been put on hold.48

48 Another important proposed natural gas pipeline—the so-called South American gas ring(suggested in response to Bolivia’s political turmoil since 2000)—would ship gas from Camiseain Peru around Bolivia to supply the Southern Cone market, potentially undercutting Bolivia’sstrategic position in the region. Apart from the political difficulties that such a plan wouldcause (the project might link Camisea in southern Peru to northern Chile, directly throughthe territory that Bolivia seeks for its corridor to the sea), it too is plagued by a number oflogistical, financial, and technical difficulties.

Energy 53

The rise of resource nationalism represents a difficult challenge forboth the United States and Latin American countries. One side effectof this has been the decline of high-level multilateral energy forums,further lessening the likelihood that political, financial, environmental,and other impediments will be tackled aggressively. In particular, thetermination of the Western Hemisphere energy ministers meetings(held annually between 1999 and 2004 under U.S. leadership and therubric of the Summit of the Americas process) has left a void. WhileSouth American leaders pledged at an April 2007 regional energysummit to initiate a ministerial-level South American Energy Council,the success of this effort is far from assured. Infrastructure deficienciesare another obstacle. According to the International Energy Agency(IEA), in order to meet increased energy demands, Latin America willrequire close to $1.3 trillion in overall investment in the energy sectorbetween 2001 and 2030, the equivalent of 1.5 percent of GDP eachyear.49 The sheer sizeof thedeficiency shouldencourageLatinAmericangovernments to adjust regulatory frameworks andprovide opportunitiesfor public and private investment from the United States and aroundthe world.

The Task Force finds that Latin America remains a relatively stable oil-producing region and potentially an important source of natural gas exports,though state ownership and political turmoil limit international and private sectorinvolvement in some countries, impeding efficiency and growth. Future outputwill depend on substantial investments in exploration and production,favoring the energy sectors in countries more open to investment,expanded collaboration, and trade. In these nations, in particular Brazil,Mexico, and Peru, the extent of dialogue and collaboration taking placeamong Mexico, Canada, and the United States should serve as a positivemodel. Expanding and stabilizing the energy trade across the regionwould have important benefits to economic development, politicalstability, and the U.S.-Latin America relationship.

49 Veronica Prado, ‘‘Energy Infrastructure in the Western Hemisphere,’’ Energy Cooperationin the Western Hemisphere: Benefits and Impediments, edited by Sidney Weintraub et al. (Washing-ton, DC: Center for Strategic and International Studies, 2007), p. 406.


New Directions: Promoting Alternative EnergySources

As the United States and other nations look to diversify their energysources and reduce dependence on oil, Latin America presents a uniqueopportunity for engagement and cooperation. Latin America alreadyleads the United States in the production and use of hydroelectricpower, which supplies 23 percent of its energy needs (as compared toless than 3 percent in the United States).50 The region has also madeinvestments in solar- and wind-powered technologies, particularly inArgentina,Brazil, andChile.Cooperationonalternativeenergyresearchand production could become an important component of U.S.-LatinAmerica relations in the years ahead. Partnering with Latin Americannations in the development of alternative energy sources would allowthe United States to build and deepen diplomatic relationships throughjoint initiatives on development, climate change, and environmentalsustainability. Two areas in particular—biofuels and nuclear energy—present important and immediate opportunities.

Only in the past several years have scarcity in oil markets, environ-mental awareness, scientific advances, and proactive subsidy policiescombined to make biofuels, notably ethanol and biodiesel, reasonablyprice competitive with petroleum products on a wider scale. Biofuelsnow provide an opportunity for Latin America and the United Statesto assumeglobal leadership ina sectorof futurecompetitiveandenviron-mental value (namely, decreased greenhouse gas emissions).

Brazil and the United States are currently the largest producers ofethanol in the world (with 38 and 50 percent of global production in2007, respectively).51 Brazil has becomea global leader in the promotionof sugar-based ethanol usage through the implementation of flex-fueltechnology, mandatory fuel blends, and infrastructure investment. In2006, domestic consumption of ethanol accounted for nearly half ofBrazilian passenger vehicle fuel supply by volume (in the United States,

50 ‘‘Statistical Review of World Energy,’’ British Petroleum, 2007, available at http://www.bp.com/productlanding.do?categoryId�6848&contentId�7033471.

51 ‘‘Industry Statistics,’’ Renewable Fuels Association, available at http://www.ethanolrfa.org/industry/statistics.

Energy 55

the figure was 4 percent). Today, close to 90 percent of all newautomobiles produced in Brazil use flex-fuel technology.

Other nations following Brazil’s lead are considering their ownpotential in this area: Guatemala, Costa Rica, and El Salvador have theright climate and well-developed sugar industries, while Honduras andColombia are looking forward to producing biodiesel based on palm.After a series of high-profile meetings between Presidents Bush and Lulada Silva, the United States and Brazil launched a Biofuels Partnership inApril 2007, pledging to expand technical assistance to nations in CentralAmerica and the Caribbean with the goal of commoditizing ethanol,first regionally and then globally.

Protectionism remains a significant challenge to building a globalbiofuels market; however, the negative consequences of external oildependence have led some to concentrate on greater energy self-sufficiency through the development of domestic biofuel industries,and by introducing subsidies, tax breaks, and tariffs. In the UnitedStates, efforts have concentrated on corn-based ethanol, which is widelyrecognized tobe less cost-andenergy-efficient than sugar-basedproduc-tion techniques.52 Nonetheless, the corn industry enjoys substantialgovernment support, as well as significant tariff protection from itsBrazilian competitors.53 These policies may hinder the development offreer biofuel commodity markets, discouraging longer-term invest-ments.

Latin America has also seen resurgent interest in nuclear power. Alittle over forty years ago, there appeared to be a genuine risk of anuclear arms race in the region—a trend that was short-circuited bythe establishment of a Nuclear Weapons Free Zone by the 1967 Treatyof Tlatelolco. Since then, Argentina, Brazil, and Mexico have builtseven nuclear power plants, although only Argentina has established astrong technical capacity in this area—a capacity that recently has been

52 0.74 BTUs of fossil fuel are required to produce 1 BTU of corn-based ethanol, whileonly 0.12 BTUs of fossil fuel are required to produce 1 BTU of sugar-based ethanol. Corn-based ethanol costs approximately $1.14 per gallon, while sugar-based ethanol costs $0.83per gallon.

53 Some Brazilian ethanol still enters the United States directly or via Caribbean countries,where it goes through a final refining process and then can enter the U.S. market duty-freeunder DR-CAFTA or the Caribbean Basin Initiative, up to an established quota.


tapped by Venezuela to explore the possible development of a nuclearenergy program of its own. Today there is a compelling argument forthe expansion of nuclear energy, which provides base power with zerogreenhouse gas emissions, as Brazil’s construction of new reactors anduse of nuclear-powered submarines attest. However, achieving suchexpansion will require that Latin America address the complex chal-lenges of managing and disposing of uranium and nuclear waste andmeeting international standards (especiallygivenconcernsoverChavez’sdesire for nuclear-enrichment capability and a relationship with Iran).

The Task Force finds that although biofuels will not displace oil and gas,they can help diversify energy choices, lower the energy intensity of nationaleconomies, decrease greenhouse gas emissions, and foster greater energy securityfor the entire hemisphere. While being mindful of the need to guaranteefood security, diversifying energy sources could be an important driverof economic development in Latin America as the region becomes animportant technology, production, and research hub in the long-termdevelopment of a global biofuels market. Expanding nuclear powerwould further efforts at energy diversification. Cooperation on suchissues provides a unique opportunity for the United States to reengageLatin America proactively, with shared environmental and energy con-cerns deepening diplomatic relationships.54

54 Most biofuel production in Latin America today is labor intensive. Expanded biofuelindustries are thus likely to create jobs in agriculture and transport. However, some activistsworry thatmostof the jobs are low-wage agricultural in nature, ensuring substandard conditions.Increased mechanization, as in the U.S. industry, is likely to limit labor demand.

Recommendations

Geographic proximity, economic, social, and cultural integration, andshared democratic values inextricably link the United States and LatinAmerica, influencing U.S. society and directly affecting U.S. nationalinterests. The next administration and Congress will have a criticalopportunity to reframe and redirect U.S. relations with the region.This report is intended to steer policy toward the four crucial areasoutlined in this report:povertyandinequality,public security,migration,and energy security. In doing so, the United States will better promoteits traditional goals of economic expansion, democratic consolidation,and narcotics control in the region.

In rethinking its policies, the United States must recognize its ownlimitations.U.S. resources andpolicy toolscannot refashionthedomesticpolicies and economies of Latin America. But by better targeting itsresources, the United States can aid Latin America’s own efforts whileadvancing U.S. interests in the security and prosperity of the entireregion.

The Task Force underscores the importance of Latin America tothe United States regardless of high-priority foreign policy issues else-where, and urges the next U.S. president to commit to work coopera-tively with all Latin American countries—and Canada—to respond toshared challenges. To do so, the Task Force recommends that U.S. policytoward the region should complement Latin America-led initiatives to alleviatepoverty and enhance public security. Comprehensive U.S. immigration lawreform is vital, and mutual cooperation toward alternative energy is awin-win proposition.

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Lessening Poverty and Structural Inequality

Reducingpovertyandimprovingaccess tomarketopportunities inLatinAmerica are central to U.S. objectives of promoting stable democraticgovernment, enabling economic expansion, and providing alternativesto illegal economic activity. It is in the U.S. interest to support thoseLatin American governments that are seeking to decrease poverty andstructural inequality.

Support Local and Regional Solutions

The Task Force urges the next administration to convene a public/private summiton poverty and inequality during its first year in office in order to review ‘‘bestpractices’’ in the region and to demonstrate U.S. commitment to work withLatin American governments and other stakeholders in addressing these problems.This forum would bring together government officials, private busi-nesses, multilateral institutions, and NGOs from Latin American coun-tries, the United States, and other involved nations, including theEuropean Union and China.

Increase Public Revenues

Latin American governments must establish the institutional infrastruc-ture necessary to boost public revenues if they are to confront socialand economic problems successfully. In addition to encouragingincreased tax collection through new administrative and enforcementmeasures, the United States should encourage countries to institutemore progressive tax systems, moving away from relying primarily onregressive and cyclical VATs and import duties, to a more progressivemix of property, personal, corporate, capital gains, and other taxes.EU aid practices have begun to reflect such concerns. The Task Forcerecommends that U.S. officials encourage the International Monetary Fundand other international and multilateral financial institutions to incorporate theredistributive nature of tax systems and revenue collection in their reviews offiscal policy and their arrangements with borrowing nations. The Task Forcealso supports increasing U.S. aid and expertise to assist in restructuring taxsystems and building the infrastructure and judicial capacity necessary to increasetax collection and limit tax evasion.

Recommendations 59

The United States should also encourage the formalization of infor-mal enterprises. While primarily a domestic issue for Latin Americangovernments, the United States should offer, through multilateral insti-tutions such as the World Bank and Inter-American DevelopmentBank, technical assistance tohelp reformregulatory structures, streamlinebusiness registration and incorporation requirements, integrate labor,and improve credit and property registries. This formalization willbenefit workers and increase future tax revenues, providing govern-ments greater capacity to address the needs of their citizens.

Promote More Open Trade

The $600 million in U.S. poverty-oriented aid to Latin America everyyear pales in comparison with the $555 billion in annual trade. Throughtrade, accordingly, the United States has an important opportunity tofurther economic development. While previous trade agreements haveprovided mutual benefits, the often uncompromising protection and/or subsidization of particular U.S. economic sectors has limited theeconomic growth and poverty-reducing effects of trade and, in somecases, heightened the dislocations associated with economic opening.The United States should promote more open trade in areas of LatinAmerican comparative advantage as an important step to reducepovertyand inequality in the region, which will further broaden long-termeconomic opportunities for Latin America and the United States.

While recognizing the political challenges and the importance of multilateralsolutions, the Task Force recommends that the next administration proactivelysupport the liberalization of textile and agricultural policies, including reducingand eventually eliminating tariffs and subsidies on agricultural commodities,including tariffs on ethanol, and relaxing rules of origin requirements on textiles.Further U.S. opening in these areas would position the United Statesto seek the further opening of economic sectors in Latin Americaimportant to U.S. businesses, such as services. It would also loweroverall costs for U.S. consumers.55 To do this the United States should

55 Arvind Panagariya, ‘‘Liberalizing Agriculture,’’ Foreign Affairs, December 2005, and JessicaX. Fan et al., ‘‘Are apparel trade restrictions regressive?’’ Journal of Consumer Affairs, Vol. 32,No. 2, Winter 1998.


workwithBrazil,otherLatinAmericancountries, andEuropeannationsto push forward the Doha Development Agenda.

At the same time, the United States cannot ignore the impetusof globalization. All countries benefit from programs that lessen thedislocations that result from technological change and market opening.The United States should host a hemispheric conference on globaliza-tion, trade, technology, and social support in order to explore the bestways to construct social safety nets appropriate for today’s economy.

TheUnitedStates should also approvepending free tradeagreementswith Colombia and Panama. Free trade remains an important policytool for expanding economicopportunities in the regionand theUnitedStates. Rejection of these agreements would severely damage closeallies, send a negative signal to other countries in the region, give riseto the view that the United States is anunreliable partner, and strengthencountries in the region that espouse anti-Americanism. The UnitedStates should also extend trade preferences to Bolivia and Ecuador as away to maintain useful relations with these complex countries. Abruptlyending these ties would serve quickly to push these countries furtheraway fromtheUnitedStatesdiplomatically, andcoulddestabilizealreadyweak institutions in politically fractious countries.

Increase and Refocus Targeted Assistance

U.S. funding for targeted assistance and antipoverty programs shouldreflect the priorities of Latin American governments (as establishedin the first-year public/private summit on poverty) and also involverestructuring and integrating the programs of various U.S. governmentbureaucracies to focus on crisis areas in the region.

TheTaskForce recommends that the next U.S. administration and Congresscontinue and expand their targeted assistance in the following ways:

• Fully fund the Millennium Challenge Account.

• Complement these programs with new initiatives that reach thepoor regions of large middle-income countries—such as Brazil andMexico—that are currently ineligible for MCA assistance. Withinthese and the MCA programs, target both poverty alleviation andinstitution-building.

Recommendations 61

• Change the implementation rules of aid programs in Congress toallow NGOs and contractors from the recipient countries, withappropriate supervision and accountability, to design and implementaid programs, providing more domestic jobs and opportunities.

• Direct more counternarcotics aid toward developing alternative eco-nomic opportunities to narcotics production.

• Use U.S. influence in multilateral institutions, particularly the WorldBank, the Inter-American Development Bank, and the OverseasPrivate Investment Corporation, to promote financial inclusion byexpanding microenterprise and small-business financing. This shouldinclude financial literacy programs, as well as technical assistanceregarding the regulatory frameworks and information systems neces-sary for private banks to enter these markets.

Enhancing Security in the HemisphereThe United States can support Latin American efforts to meet securitythreats by offering resources and expertise aimed at improving lawenforcement, judicial institutions, and public transparency and account-ability.

Build Capacity and Strengthen CooperationImproving public security requires strengthening the rule of lawthroughout Latin America. In the end, these changes must come fromLatin American governments themselves. Nevertheless, the UnitedStates can play a positive role by offering support for security sectorand judicial reform, regional cooperation, and information sharing.

The Task Force recommends that U.S. assistance focus on law enforcementand judicial reform in Latin America. While the United States is alreadyinvolved in some of these programs, they should be expanded both inbreadth and depth, to assist in, among other things, police training. TheUnited States should also offer expanded investigative and prosecutorialtraining and expertise in judicial transparency, in order to encouragethe professionalization of judicial institutions.

The United States should also encourage greater international coop-eration at national, state, and local levels by expanding information


exchanges. These include building on pilot programs, such as theone between Rio de Janeiro and Boston city police, that promotedepartment-level interactions between U.S. and Latin American forces.It also includes exchanges between Latin American governments, lawenforcement agencies, and civil society organizations to evaluate pro-grams and practices in other countries and regions and promote innova-tive solutions to security problems.

Address Both Supply and Demand in Counternarcotics

Illegal narcotics represent a complex social, institutional, and legal chal-lenge worldwide, and are a paramount concern of U.S. policymakers.The United States should establish a comprehensive drug policy thataddresses both supply and demand. To combat supply, the United Statesshould continue to work closely with Latin American governments andregional organizations on eradication and interdiction and, in line withthese recommendations, on targeting U.S. aid to institution-building,anticorruption,andpoverty-alleviationefforts.TheUnitedStates shouldcontinue to assist Colombia in its counternarcotics andcounterinsurgentinitiatives with aid packages similar to the one approved by Congressin 2007, which established a better balance between military and policeaid and economic and social assistance, especially with respect to therule of law. Continued emphasis in Plan Colombia on prosecutinghuman rights violations and political violence, including offenses com-mitted by former and reconstituted paramilitary members, whetheragainst labor leaders or any other member of Colombian civil society,will remain critical to creating a stable environment.

As with all crime, professionalization of law enforcement and judicialinstitutions is crucial. Only by rooting out corruption and ensuringthat criminals face justice will the cycle of impunity end. Given theimportance of Latin American militaries in counternarcotics strategies,current U.S. assistance should continue. In the long run, however,civilian police forces that operate independently to combat the drugtrade and crime are critically important for consolidating democraticinstitutions. Over time, the security functions in these countries shouldshift significantly to law enforcement institutions. To aid this process,the United States should offer greater assistance to Latin American

Recommendations 63

governments for training and equipping competent police forces to takeon the obligations that in some countries currently involve the military.

The United States must recognize that a long-term solution to thenarcotics problem will require reducing the demand for, together withthe supply of, drugs. As long as a lucrative U.S. drug market (estimatedat more than $60 billion) exists, strong demand pull will continue tochannel illegal drugs to the United States. The U.S. government shouldfocus on domestic prevention, enforcement, and rehabilitation. In addi-tion, as worldwide drug consumption grows, it is crucial for the UnitedStates to work with other nations in combating this transnational threat.The United States should push the European Union in particular toshare the financial and logistical burden of counternarcotics strategiesand to be more effective in addressing the broader demand side forillegal substances. This will require consultation, information sharing,and an expansion of U.S. policy priorities.

Control Guns and Money FlowsThe millions of guns—and especially illegal guns—in the hands ofLatin Americans erode state control and increase violence. Many ofthese weapons come from the United States. The United States shouldcommit to control the flow of guns into Latin America better by:

• Supporting a binding international arms trade treaty that establishesinternational standards toregulatethe international transferofconven-tional arms, with real backing from the five permanent members ofthe UN Security Council and above all from the United States.

• Ratifying and ensuring compliance with the Inter-American Con-vention Against the Illicit Manufacturing of and Trafficking in Fire-arms, Ammunition, Explosives, and other Related Materials.

In addition to weapons, drug traffickers depend on the ability to‘‘clean’’ illegal profits. The United States should strengthen currentanti–money laundering initiatives by:

• Working closely with Latin American counterparts, and particularlywith Mexican authorities, to continue regulating foreign exchangecompanies, or ‘‘casas de cambio,’’ that process large amounts ofdrug money.


• Improving monitoring of border flows from the United States toMexico, sincebulkcashsmuggling is theprincipalmethod formovingdrug money out of the United States. This should be done inconjunction with illegal arms trafficking initiatives.

• Creating a system similar to the CIA-based Foreign Terrorist AssetTracking Group for the dissemination of intelligence, diplomatic,regulatory, and law enforcement information related to narcotics-based money laundering. All information relating to narcotics financ-ing should be centrally analyzed and distributed to all relevant policy-makers.

• Ensuring that the Financial Crimes Enforcement Network(FinCEN), the bureau of the Treasury Department that combatsmoney laundering and financial crimes, has adequate resources totarget narcotics-related money laundering.

Collaborate to Dismantle Transnational GangsGangs operate cross border in many Central American countries andthe United States. The United States should work to impede theexpansion of these transnational gangs by:

• Increasing information sharingwithCentralAmericanandCaribbeaninvestigative and police institutions, including disclosure of the fullcriminal records of U.S. deportees (not just the crime that led todeportation), so that proper measures can be taken by the receiv-ing countries.

• Increasing the $50 million set aside in the Merida Initiative forCentral American nations. These funds should be used for policeprofessionalization, which will aid in the fight against drug traffickingas well as transnational gangs.

Reforming Immigration Policy

Immigration reform is one of the most pressing domestic policy issuesfacing the United States. It is also a critical issue for U.S.-Latin Americarelations. The defeat of immigration reform in the U.S. Senate in 2007suggests that no broad national policy change will be forthcoming in

Recommendations 65

the near term. Piecemeal measures implemented by states and citiesare no substitute for a coherent federal policy on immigration. Thenext president and Congress must face this issue in order to meet U.S.security, economic, and foreign policy interests better.

The Task Force urges the next administration and Congress to negotiateand approve comprehensive immigration reform in 2009. Viable immigrationpolicy must: improve border security and management; address theunauthorized work force already here; ensure employer security, verifi-cation, and responsibility; and expand a flexible worker program tomeet changing U.S. economic demands.

Initiatives to improve border security must address the flow of goodsand people across all U.S. borders and ports of entry. Notwithstandingthis broader requirement, the Task Force recommends closer cooperation withMexican law enforcement authorities, particularly for the interdiction of illegalcrime and human smuggling networks that operate along our shared border.Passage of the Merida Initiative would be an initial step toward helpingto strengthen Mexican law enforcement capacity and deepening formalties and cooperation between the two countries’ security forces.

Immigration reform must include regularizing the status of theestimated twelve million unauthorized workers currently in the UnitedStates. Deportation or ‘‘attrition through enforcement’’ are not realisticoptions to meet U.S. goals of improving security and lessening theconsequences for the U.S. work force. Instead, Congress should permita formofearnedadjustment that authorizes these twelvemillion individ-uals and their activities within the United States.56

The Task Force believes that the United States should reformulate itsimmigration policy to encourage circular migration. This would allow immi-grants to come to the United States for a set period of time, improvetheir own economic situation while also contributing to the U.S.economy, and then return home with new human and financial capital,creating the potential for longer-term economic development in theirhome communities and countries. To be successful, policy reformsshould:

56 The Council on Foreign Relations is currently sponsoring an Independent Task Forcereport on immigration policy that is scheduled to be released in 2009.


• Provide longer and more flexible labor contracts. To promote circu-larity, contracts must be long enough to allow migrants to recoverfinancial costs associated with migration and save enough money toestablish businesses upon return. Restrictive policies, such as thoselimiting workers to stays of a few years, could be self-defeating, asworkers generally have strong incentives to overstay their visas.

• Provide options for reentry so that migrants participating in seasonalwork can travel between countries during the working season, rein-forcing ties and the likelihood of return.

• Encourage remittances through programs in the formal bankingsystem to extend financial services to immigrants. This will enableless costly means of transferring money and saving for productiveinvestment in their home communities.

• Target migrants returning to their home countries through existingUSAID and multilateral-institution technical assistance and capacity-building programs, supporting these individuals’ efforts to reestablishtheir community ties and invest in local business ventures.

Coordinate with Sending Countries to Regulate Migratory Flows

Giventhehighpercentageof immigrants fromparticularLatinAmericancountries, the UnitedStates should pursue bilateral ormultilateral immi-gration agreements with these nations. Ongoing cooperation on migra-tion should be a mainstay of the bilateral agenda between the UnitedStates and the main origin countries.Bilateral or multilateral agreements,such as those already being developed among Latin American nations,canensure that the rights ofmigrants are respected, that theyareworkingin sectors in need of labor, and that they are not posing a security threatto the receiving country. Through these agreements, the United Statescould certify labor shortages in particular sectors of the economy. Thecountries could, in turn, enact measures that ensure that temporaryworkersdo in fact returnhomeafter their stays.These formal agreementsshould include provisions to make earned health and pension benefitsportable, as well as provide information to expatriated workers onprojects, jobs, and other opportunities within their home countries toencourage return.

Recommendations 67

Developing and Diversifying Energy Sources

There is a unique opportunity in the energy sector for genuine andconstructive collaboration and cooperation between Latin Americannations and the United States by addressing the growing challenges ofenergy security and climate change.

Promote Cooperation and Investment in Traditional Energy Sources

In the oil and gas sectors, more effective production and extractionwill increase worldwide energy supply and put downward pressure onprices. While U.S. influence is limited (particularly with the growingrole of national oil companies in the region and worldwide), it canencourage two developments. First, the Task Force recommends supportingthe creation of subregional and regional energy working groups on the modelof the North American Energy Working Group. To depoliticize energycooperation, such organizations should concentrate on technical issuessuch as data exchange, electricity connectivity, fuel standards, infrastruc-ture protection, environmental sustainability, and lessons learned. Sec-ond, the Task Force recommends that the United States actively support environ-mentally sustainable energy infrastructure financing in Latin America throughmultilateral lending institutions and foreign direct investment. In particular,the United States can facilitate funding for the last stages of Peru’sCamisea natural gas project.

Develop Alternative Energy Markets

The Western Hemisphere produces 80 percent of the world’s biofuels,and a precedent for collaborative leadership has been established bythe U.S.-Brazil initiative, which includes cooperation on standards tofacilitate trade, technologydistribution, and support for thedevelopmentof biofuel production in other countries. The expansion of these indus-tries, aided by U.S. domestic and foreign policy incentives, can benefitthe environment, foster economic development through technologytransfer and adaptation, and aid in poverty reduction through jobcreation in the hemisphere. The Task Force recommends building on theU.S.-Brazil Biofuels Pact to encourage the development of alternative energyin the region. The most important policy steps are domestic, including


removing disincentives for hemisphere production and trade in biofuelsandcreating incentives forU.S.gasdistributors to increase the availabilityof biofuels.

The Task Force also recommends that the United States encourage theproduction of alternative fuels and their use by creating a Western Hemisphereumbrella initiative for sustained collaboration and long-term cooperation withregional partners. This would include:

• Creating a Hemispheric Alternative Energy Initiative to developcapacity and infrastructure, encourage innovation, and address issuesrelated tobiofuels suchas foodsecurity andenvironmental protection.

• Establishing a formal working group with Brazil, Argentina, andMexico to discuss issues associated with the expansion of nuclearenergy, in accordance with the International Atomic Energy Agencyrules, and to collaborate on efforts that are both economically andenvironmentally sustainable.

• Promoting the production of alternative energies, such as wind andsolar, through new incentives and trade missions sponsored by thesecretary of commerce, and World Bank, IDB, and InternationalFinance Corporation financing.

Broadening Diplomacy

While the United States maintains productive relationships with thevast majority of Latin American nations, there are a few with whichthe United States has strained relations. The Task Force finds that theUnited States must officially recognize all countries in the region and shouldwork to identify areas of common interest and cooperation in order to advanceU.S. interests, regardless of the countries’ political identity; this includes Cubaand Venezuela.

The United States should continue to voice strong support fordemocracy and to express concern when it perceives that governmentsare failing to maintain democratic institutions and basic human rightspractices. But it should not cut diplomatic ties in such cases. By ignoringand isolating certain nations in our hemisphere, the United Statesreduces its own influence in these countries and precludes dialogue

Recommendations 69

through which mutual interests can be addressed; at the same time, itinadvertently strengthens the regimes in these countries, as the experi-ence with Cuba amply demonstrates. U.S. relations with Brazil andMexico should also be strengthened and expanded.

Deepen U.S. Relations with Brazil

Brazil is the fourth-largest democracy and the ninth-largest economyin the world, and it has become an increasingly important actor notonly in Latin America but globally. The Task Force recommends that theUnited States build on its existing and welcome collaboration with Brazil onethanol to develop a more consistent, coordinated, and broader partnership thatincorporates awide range of bilateral, regional, andglobal issues.Onecrucial areafor partnership is regional security. Expanding on current peacekeepingefforts, the United States should broaden and deepen regional securitycooperation with Brazil. The narcotics trade threatens Brazil’s security,as it is an important transit country for the European drug market andincreasingly a consumer country of cocaine and other drugs. IncreasingBrazilian involvement in the fight against narcotics through govern-ment-to-government cooperation and joint security initiatives will notonly ease the U.S. burden in the war on drugs, but will also makeU.S. and Brazilian efforts more effective.

The United States should also work closely with Brazil to pushforward the Doha Roundof global tradenegotiations. While this wouldmean changing domestic agricultural policies, U.S. negotiators couldthen aggressively pursue more open markets in U.S. areas of concern.

Finally, energy and climate change provide ample opportunity fordeepening ties and securing mutual economic and environmentaladvantages. Both the United States and Brazil are increasingly turningto LNG to satisfy future energy demands. The United States shouldwork together with Brazil to develop the LNG hemispheric market,benefiting both countries’ energy matrixes. On biofuels, the UnitedStates should pursue a broader joint policy initiative that promotes thedevelopment of environmentally sensitive alternative fuels in the regionand around the world.


Strengthen Cooperation with MexicoFew countries are as important for U.S. safety and security as Mexico.Mexico is the United States’ third-largest trading partner (after Canadaand China), with $330 billion worth of goods crossing the border eachyear. It is the third-largest supplier of oil to the United States. Nearlytwo-thirds of the forty-five million Latinos in the United States areMexican descendants, and Mexico is currently the largest supplier ofnew immigrants, legal and illegal. Even asNAFTA has driven economicintegration, official U.S.-Mexico relations lag behind what is a de factosocial and economic integration between these two countries. TheUnited States has a vital interest in the stability and prosperity of Mexico,which, in large measure, depends on the continued consolidation ofMexico’s democratic institutions and on closing the gap in the standardsof living between Mexico and the United States.

Security cooperation is becoming increasingly central to U.S.-Mex-ico relations. The recently announced Merida Initiative would, if passedby Congress, provide $1.4 billion worth of equipment and training inthe next three years to assist Mexico in its fight against escalating drugviolence. This proposal recognizes Mexico as an important partner infacing the mutual challenge of narcotics trafficking. The Task Forcesupports this program, but calls for an extension in funding for police and judicialreform and training. In particular, it should emphasize the professionalizationof state and local (as opposed to national) police forces.

Energy remains an important area of mutual interest. The UnitedStates should focus on the prospects for boosting oil and gas productionby promoting U.S. company service contracts (allowed under existingMexican law) and through assistance in the ultra-deep waters of theGulf of Mexico. The United States should also stand ready to spurinvestment in PEMEX when and if the Mexican government seeks it.

Finally, U.S. immigration policy affects Mexico more than anyother country. Ten percent of Mexicans now live in the United States,and more than six million Mexican workers lack documentation. Giventhe size of its migrant population, its proximity, and the importance of thisissue for security as well as U.S.-Mexico relations, the Task Force urges theimplementation of new guest worker programs, regularization of the status ofillegal immigrants residing in the United States, and encouragement of legalcircular migration, especially for agricultural workers.

Recommendations 71

Address Venezuela through Multilateral InstitutionsThe anti-U.S. policies of President Chavez of Venezuela should betaken seriously by U.S. policymakers. It is important that the UnitedStates keep a close watch on Venezuela and that Chavez’s potentiallydestabilizing policies within Latin America be carefully monitored. Atthe same time, a good deal of Venezuela’s international support islimited to the concretebenefits thatVenezuela provides, suchas financialsupport, subsidized oil, and infrastructure investment. Thus, accordingto the most recent Latinobarometro poll of Latin Americans, PresidentChavez’s leadership ranks at the bottom, only slightly above lowest-ranked Fidel Castro. The 2007 Pew Global Attitudes Project indicatesthat nearly three-quarters of Brazilians, Peruvians, and Chileans doubtChavez is doing ‘‘the right thing’’ in world affairs. This suggests theUnited States must temper its vigilance with a careful assessment ofChavez’s real influence in the region.

U.S. policy is limited in its ability to sway either the domestic orforeign policy of Venezuela. Nevertheless, there are actions the UnitedStates can take to protect its interests in Latin America further.These include:• Maintaining official relations with the Venezuelan government, both

formal and informal, in order to keep channels open.• Working through multilateral institutions, in particular the United

Nations and the Organization of American States, to monitor demo-cratic institutions and criticize antidemocratic behavior in Venezuela(and other countries).

• Increasing funding for ‘‘social justice’’ programs and policies in LatinAmerica. Providing a U.S.-backed alternative to Chavez’s visionwill improve U.S. standing in the region and promote U.S. interests.

• Creating incentives for U.S. private sector investment in energyinfrastructure in the region and U.S. leadership in the developmentof alternative fuels. This could both improve diplomatic relationswith other countries in the region and help diversify U.S. energyconsumption.

• Resist the temptation to react unilaterally to the results of Interpol’sinvestigations in Colombia. Measures initiated by multilateral organi-zations, such as the United Nations, the European Union, and the


OAS, as well as diplomatic efforts by a number of countries in theWestern Hemisphere, will be the most effective avenue against anycountry found to be supporting criminal and insurgent groupsactively.

An emerging issue for U.S.-Venezuela relations centers on HugoChavez’s recent announcement that Venezuela will pursue nuclearpower. Given the increasingly authoritarian nature of the Venezuelangovernment and its close tieswith Iran, this announcement is particularlytroubling. In response to Venezuela, the United States should:

• Aggressively pursue already existing efforts such as collaborating withpartners at the International Atomic Energy Agency and the NuclearSuppliers Group to develop universal rules that constrain the spreadof enrichment and reprocessing. This will be more effective thannarrowly focusing on Venezuela, as the latter approach is unlikelyto attract the multilateral support necessary for success.

• Focus on the most sensitive parts of Venezuela’s potential nuclearprogram—uranium enrichment and plutonium reprocessing—withthe aim of ensuring that no Venezuelan nuclear program involvescapabilities on either front.

Open Informal and Formal Channels with Cuba

Cuba is an authoritarian state guilty of serious human rights violations.Human rights organizations estimate that there are between one hun-dred and two hundred political prisoners in Cuba today. In early 2008,Raul Castro was elected by the Cuban National Assembly and itsCouncil of State to become the president of the Council of State andof the republic. Within the framework of socialism, a number ofmeasures designed to enhance the quality of people’s lives and personalfreedoms have followed. More, in the realm of shrinking the size ofthe state and boosting productivity and the creation of wealth, mayfollow. Fidel Castro’s formal resignation and the stable succession ofhis brother as head of state have challenged the effectiveness of a half-century of U.S. economic sanctions, whether designed to destabilizeor overthrow the regime, interrupt its continuity, or bring liberaldemocracy to the island.

Recommendations 73

The United States can play a positive role in promoting the valuesof an open society with policies that support the greater enjoyment ofhuman rights by Cubans and lay the groundwork for a pluralistic futureon the island. This could be facilitated by increasing contact betweenU.S. andCuban citizens (including Cuban Americans and their families)through reducing current Department of Treasury travel restrictions.While increased trade might funnel more resources to the Cubangovernment and strengthen its short-term staying power, economicisolation has long provided Cuba’s authorities with a convenient excusefor many of the island’s core problems. The time is ripe to show theCuban people, especially the younger generations, that an alternativeexists to permanent hostility between these two nations and that theUnited States can play a positive role in Cuba’s future. Given this, theUnited States should initiate a series of steps, with the aim of liftingthe embargo against Cuba. The United States should:

• Permit freer travel to and facilitate trade with Cuba. The WhiteHouse shouldrepeal the2004restrictionsplacedonCuban-Americanfamily travel and remittances.

• Reinstate and liberalize the thirteen categories of licensed people-to-people ‘‘purposeful travel’’ for other Americans, instituted bythe Clinton administration in preparation for the 1998 papal visitto Havana.

• Hold talks on issues of mutual concern to both parties, such asmigration, human smuggling, drug trafficking, public health, thefutureof theGuantanamonavalbase, andonenvironmentally sustain-able resource management, especially as Cuba, with a number offoreign oil companies, begins deep-water exploration for potentiallysignificant reserves.

• Work more effectively with partners in the Western Hemisphereand in Europe to press Cuba on its human rights record and formore democratic reform.

• Mindful of the last one hundred years of U.S.-Cuba relations, assureCubans on the island that the United States will pursue a respectfularm’s-length relationship with a democratic Cuba.


• Repeal the 1996 Helms-Burton law, which removed most of theexecutive branch’s authority to eliminate economic sanctions. Whilemoving to repeal the law, the U.S. Congress should pass legislativemeasures, as it has with agricultural sales, designed to liberalize tradewithand travel toCuba,while supportingopportunities to strengthendemocratic institutions there.

In pursuing the full range of U.S. objectives through the concretepolicy recommendations laid out in this report, the United States mustfocus its efforts and resources on helping Latin America strengthen thepublic institutions necessary to address the identified challenges. Indoing so, Washington should work in partnership with Latin Americannations through multilateral organizations such as the World Bank, theInter-American Development Bank, the International Monetary Fund,the International Finance Corporation, and the Organization of Ameri-can States. It should also continue to work closely with civil societyorganizations and domestic and international businesses to create moreinclusive economic, social, and political opportunities for Latin Ameri-can countries and their citizens.

Achieving the ambitious goals of strengthening institutions andimproving the lives of Latin Americans will require long-term effortson the part of many participants, most importantly Latin Americangovernments and societies themselves.Nevertheless, there is a significantsupporting role for the United States. Expanding its policy frameworkand concentrating on strategic regional partnerships will best promoteU.S. interests, enhancing stability, security, and prosperity throughoutthe hemisphere.

Additional View

I am pleased to endorse most of the analysis and recommendations ofthis report, and particularly welcome theproposals forU.S. immigrationreformand for changes inU.S.policy towardCuba. I thought,however,it would be helpful to offer these supplemental comments.

First, I believe that an effective redirection of U.S. policy in thehemisphere must be accompanied by a reshaping of Washington’sglobal policies. Constructive relations with Latin American nationsrequire that the United States respect international rules and multilateralarrangements, decrease reliance on military force, and end the use oftorture (especially while preaching about human rights).

Second, the report, in my view, understates the economic andpolitical gains that most Latin American nations have made in recentyears, and overestimates the potential contributions of U.S. policy tofurther progress in many areas.

Third, I think that the report, while focusing on a set of criticalchallenges for Latin America, gives insufficient attention to, first, theimportance of sustained and significant economic growth in the regionto addressing all of these challenges, and, second, how the United Statescan help foster the needed growth by further opening its economyand working toward greater regional economic integration on trade,investment, and infrastructure. The targeted initiatives recommendedin the report will be useful, but the United States can contribute mostto Latin America and U.S.-Latin America relations by helping to createand sustain a broader environment for economic advance.

Peter Hakim

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Task Force Members

Charlene Barshefsky is senior international partner at Wilmer CutlerPickering Hale and Dorr LLP (WilmerHale) in Washington, DC. Shejoined the firm after serving as U.S. trade representative (USTR) from1997 to 2001 and as acting and deputy USTR from 1993 to 1996.She serves on the boards of directors of American Express Company,the Estee Lauder Companies Inc., Intel Corporation, and StarwoodHotels & Resorts Worldwide, Inc. She also serves on the Board of theCouncil on Foreign Relations.

R.RandBeers is currently president of the National Security Networkand an adjunct lecturer on terrorism at the Kennedy School of Govern-ment at Harvard University. He most recently worked as the nationalsecurity adviser for the Kerry-Edwards campaign. He served in fourpositions on the National Security Council (NSC) staff at the WhiteHouse during four administrations. His functions included director forcounterterrorism and counternarcotics, director for peacekeeping, andsenior director for intelligence programs (1988–98), as well as assistantsecretary of state for international narcotics and law enforcement affairs(1998–2002) and special assistant to the president and senior directorfor combating terrorism on the NSC staff (2002–2003).

Note: Task Force members participate in their individual and not their institutional capacities.*The individual has endorsed the report and submitted an additional view.

77


Alberto R. Coll is professor of international law and director of theEuropean legal studies program at the DePaul College of Law inChicago. Before joining DePaul in 2005, he was chairman of theStrategic Research Department at the U.S. Naval War College inNewport, Rhode Island, where he also served for five years as deanof the Center for Naval Warfare Studies. From 1990 to 1993, Dr. Collserved as principal deputy assistant secretary of defense, overseeing theDefense Department’s policy, strategy, and budget in the areas of specialoperations forces and ‘‘low-intensity’’ conflict, including counterterror-ism. For his work, he received the Secretary of Defense Medal forOutstanding Public Service.

Margaret E. Crahan is Kozmetsky distinguished professor and directorof the Kozmetsky Center of Excellence in Global Finance at St.Edward’s University. From 1994 to 2008 she was the Dorothy Epsteinprofessor at Hunter College and the Graduate Center of the CityUniversity of New York and from 1982 to 1994 she was the HenryR. Luce professor of religion, power and political process at OccidentalCollege. She currently is vice president of the board of the Inter-American Institute of Human Rights. Dr. Crahan has done researchon topics spanning the sixteenth through twentieth centuries and haspublished over one hundred articles and books.

Jose W. Fernandez is a partner and co-chairs the Latin Americapractice at Latham & Watkins LLP. For nearly three decades, his workhas focused on Latin America, working on a wide variety of mattersas the economies of the region have evolved. He has advised clientson financings, acquisitions, privatizations, securities offerings, and jointventures across a number of Latin American countries. Mr. Fernandezserves on the board of directors of Dartmouth College, ACCIONInternational, and the Council of the Americas, among others. He hasbeen both chair of the ABA’s Inter-American Law Committee andchair of the Committee on Inter-American Affairs of the New YorkCity Bar. He is currently co-chair of the Cross Border M&A and JointVentures Committee of the New York State Bar Association, and amember of the Latin America Advisory Council of the ABA.


Francis Fukuyama is the Bernard L. Schwartz professor of internationalpolitical economyat thePaulH.NitzeSchoolofAdvancedInternationalStudies (SAIS) at the Johns Hopkins University and the director ofSAIS’s international development program. He is also chairman of theeditorial board of a new magazine, the American Interest. Dr. Fukuyamawas a member of the president’s Council on Bioethics from 2001 to2005. He is a member of advisory boards for the National Endowmentfor Democracy, the Journal of Democracy, and the NewAmerica Founda-tion.

Peter Hakim* is president of the Inter-American Dialogue, the leadingU.S. center for policy analysis and exchange on Western Hemisphereaffairs. He was a vice president of the Inter-American Foundation andworked for the Ford Foundation in both New York and Latin America.Mr. Hakim has taught at MIT and Columbia. He currently serves onboards and advisory committees for the Foundation of the Americas,theWorld Bank, the Inter-American DevelopmentBank, ForeignAffairsen Espanol, Intellibridge Corporation, and Human Rights Watch.

James A. Harmon is chairman of Harmon & Co., a financial advisoryfirm organized in 2001, and chairman of the Caravel Fund (Interna-tional)Ltd., anemergingmarkets fund.Mr.Harmonservedas chairman,president, and CEO of the Export-Import Bank of the United Statesfrom 1997 to 2001. Prior to entering government services Mr. Harmonwas chairman and CEO of the investment bank Wertheim Schroder.In 2004, Mr. Harmon was elected chairman of the World ResourcesInstitute. Mr. Harmon is a senior adviser to the Rothschild Group andis a member of its European Advisory Council. Mr. Harmon is amember of the board of directors of Questar Corporation and the AlfaBank (Moscow) Capital Partners Board. Mr. Harmon is also a memberof the boards of the School of International and Public Affairs (SIPA)at Columbia University, Africare, and the Center for Global Develop-ment, and a trustee emeritus of Brown University and Barnard College.

John G. Heimann is the founding chairman of the Financial StabilityInstitute of the Bank for International Settlements and now serves as


its senior adviser. He was a founding partner of Warburg Pincus &Co., and later the chairman of the Financial Institutions Group andmember of the executive committee of Merrill Lynch & Co. Mr.Heimannhas served asU.S. comptroller of the currency, superintendentof banks for New York State, and chairman of the Federal DepositInsurance Corporation. He is a member of the Group of Thirty.

James T. Hill retired as a four-star general in the U.S. Army afterhaving served since 1968. From 2002 to 2004 he was the combatantcommander of the U.S. Southern Command, commanding all U.S.military operations and relationships in the Caribbean and Central andSouth America. In assignment related to Latin America, General Hillalso served as deputy commanding general of the Multinational Forcein Haiti (1994–95) and assistant deputy director for politico-militaryaffairs on the Joint Staff (1992–94). Currently he is the president ofthe JT Hill Group, a strategic consulting firm located in Miami, Florida.

Donna Hrinak is the director for corporate and government affairs inLatin America for Kraft Foods Inc. She joined Kraft in 2006 afterworkingwith the international advisory firm McLarty Associates,whereshe was senior director. She also worked as the co-chair of the Interna-tional Trade and Competition practice group at the law firm of SteelHector & Davis. From 1974 to 2004, Ambassador Hrinak served as aU.S. Foreign Service officer. She completed her Foreign Service careeras ambassador to Brazil and also served as ambassador to Venezuela,Bolivia, and the Dominican Republic and as deputy assistant secretaryof state forMexicoandtheCaribbean. In1994, she servedas coordinatorfor policy for the Miami Summit of the Americas. In addition toher Foreign Service assignments, Hrinak has worked in the office ofRepresentative Patricia Schroeder on a fellowship from the AmericanPolitical Science Association. Hrinak serves on the boards of the Inter-American Dialogue and the Pan American Development Foundationand on the board of counselors of McLarty Associates.

James V. Kimsey created America Online, Inc., and currently servesas chairman emeritus. In 1996, he launched the Kimsey Foundation,


which provides grants that benefit the Washington, DC, communityin areas from arts to education. Mr. Kimsey received presidentialappointments to the Kennedy Center board of trustees and the WestPoint board of visitors. In 2001, Secretary of State Colin Powell namedMr. Kimsey as chairman of the International Commission on MissingPersons. Mr. Kimsey also serves as chairman emeritus of RefugeesInternational and as a member of the board of the International Cri-sis Group.

Jim Kolbe served in the U.S. House of Representatives from 1985 to2007, representing the Tucson area. A Republican, Mr. Kolbe servedfor twenty years on the House Appropriations Committee. He wasalso chairman of the Treasury, Post Office, and Related Agenciessubcommittee for four years, and for the last six years in Congress,he chaired the Foreign Operations, Export Financing, and RelatedAgencies subcommittee. Congressman Kolbe is currently a senioradviser at McLarty Associates and serves as a senior transatlantic fellowfor the German Marshall Fund of the United States and as an adjunctprofessor in the College of Business at the University of Arizona.

Kellie Meiman leads the Brazil/Southern Cone practice of the interna-tional advisory firm McLarty Associates. She worked most recently atthe Office of the U.S. Trade Representative (USTR) as director forMercosur and the Southern Cone, where she had primary responsibilityfor Brazil, Argentina, Chile, Paraguay, and Uruguay. Prior to her workat USTR, Ms. Meiman served as a Foreign Service officer with theU.S. Department of State.

Shannon K. O’Neil is the fellow for Latin America studies at theCouncil on Foreign Relations. Before joining the Council, she was ajustice, welfare, and economics fellow and an executive committeemember and graduate associate at the Weatherhead Center for Interna-tional Affairs at Harvard University. She was also a Fulbright Scholarin Mexico and Argentina. Prior to her academic work, Dr. O’Neilworked in the private sector as an equity analyst at Indosuez CapitalLatin America and Credit Lyonnais Securities.


Marıa Otero is president and CEO of ACCION International. Ms.Otero chairs the board of ACCION Investments, co-chairs theMicroenterprise Coalition, and serves on the boards of directors ofthree regulated microfinance institutions in Latin America. She chairedthe board of Bread for the World from 1992 to 1997. In 1994, PresidentClinton appointed Ms. Otero to serve as chair of the board of directorsof the Inter-American Foundation, a position she held until January2000. She has also served in an advisory capacity to the World Bank’sConsultative Group to Assist the Poorest.

Arturo C. Porzecanski is a professor of international finance anddistinguished economist-in-residence at American University’s Schoolof International Service, having previously taught at Columbia Univer-sity, New York University, and Williams College. He is a member ofthe board of directors of the Tinker Foundation and of the WashingtonOffice on Latin America. Prior to his current academic career, Dr.Porzecanski worked for nearly three decades as an international econo-mist on Wall Street, starting out with J.P. Morgan in the 1970s, wherehe servedaseconomicadviseronLatinAmerica.He later rose tobecomechief economist for emergingmarkets at several financial institutions, thelast of which was the European banking group ABN AMRO.

David J. Rothkopf is president and chief executive officer of GartenRothkopf, aWashington,DC–based international advisory firm servingthe investment, corporate, and government communities. He is also avisiting scholar at the Carnegie Endowment for International Peace,where he is chairman of the Carnegie Economic Strategy Roundtable.He is author of Running the World: The Inside Story of the National SecurityCouncil and the Architects of American Power; The Superclass: The GlobalPower Elite and the World They are Making; and the forthcoming Power,Inc.: The Untold Story of the Global Power Struggle Between Companies,Countries and Their Leaders. He served as deputy undersecretary ofcommerce for international trade policy development and later as actingundersecretary of commerce for international trade during the Clintonadministration. Rothkopf is a member of the advisory boards of theUnited States Institute of Peace, the Center for Global Development,


and the Johns Hopkins/Bloomberg School of Public Health, and heis an adjunct professor of international affairs at Columbia University.

Julia E. Sweig served as senior adviser for this Task Force report. Sheis the Nelson and David Rockefeller senior fellow for Latin Americastudies and director of Latin America studies at the Council on ForeignRelations. Dr. Sweig is the author of Friendly Fire: Losing Friends andMaking Enemies in the Anti-American Century and Inside the Cuban Revolu-tion, as well as numerous scholarly articles, opinion pieces, congressionaltestimony, and CFR reports on Cuba, Venezuela, the Andes, LatinAmerica, and American foreign policy. She serves on the editorial boardof Foreign Affairs en Espanol and as a consultant on Latin American affairsfor the Aspen Institute.

Task Force Observers

Laurie A. GarrettCouncil on Foreign Relations

Eric JacobsteinHouse Subcommittee on Western Hemisphere

Jamal A. KhokharInter-American Development Bank

Daniel Kurtz-PhelanForeign Affairs

J. Patrick MaherNational Intelligence Council

Carl E. MeachamSenate Committee on Foreign Relations

Janice O’ConnellStonebridge International LLC

Jennifer J. Simon ButlerSenate Committee on Foreign Relations

Jason SteinbaumHouse Subcommittee on Western Hemisphere

David G. VictorCouncil on Foreign Relations

Mark WalkerOffice of Representative Daniel Burton

85

Recent Independent Task Force ReportsSponsored by the Council on Foreign Relations

U.S.-China Relations: An Affirmative Agenda, A Responsible Course (2007); Carla A. Hills and DennisC. Blair, Chairs; Frank Sampson Jannuzi, Project Director

National Security Consequences of U.S. Oil Dependency (2006); John Deutch and James R. Schlesinger,Chairs; David G. Victor, Project Director

Russia’s Wrong Direction: What the United States Can and Should Do (2006); John Edwards and JackKemp, Chairs; Stephen Sestanovich, Project Director

More thanHumanitarianism:AStrategicU.S.ApproachTowardAfrica (2006);AnthonyLake andChristineTodd Whitman, Chairs; Princeton N. Lyman and J. Stephen Morrison, Project Directors

In the Wake of War: Improving U.S. Post-Conflict Capabilities (2005); Samuel R. Berger and BrentScowcroft, Chairs; William L. Nash, Project Director; Mona K. Sutphen, Deputy Director

In Support of Arab Democracy: Why and How (2005); Madeleine K. Albright and Vin Weber, Chairs;Steven A. Cook, Project Director

Building a North American Community (2005); John P. Manley, Pedro Aspe, and William F. Weld,Chairs; Thomas P. d’Aquino, Andres Rozental, and Robert A. Pastor, Vice Chairs; ChappelA. Lawson, Project Director; Cosponsored with the Canadian Council of Chief Executivesand the Consejo Mexicano de Asuntos Internationales

Iran: Time for a New Approach (2004); Zbigniew Brzezinski and Robert M. Gates, Chairs; SuzanneMaloney, Project Director

Renewing the Atlantic Partnership (2004); Henry A. Kissinger and Lawrence H. Summers, Chairs;Charles A. Kupchan, Project Director

Nonlethal Weapons and Capabilities (2004); Graham T. Allison and Paul X. Kelley, Chairs; RichardL. Garwin, Project Director

New Priorities in South Asia: U.S. Policy Toward India, Pakistan, and Afghanistan (2003); Frank G.WisnerII, Nicholas Platt, and Marshall M. Bouton, Chairs; Dennis Kux and Mahnaz Ispahani, ProjectDirectors; Cosponsored with the Asia Society

Finding America’s Voice: A Strategy for Reinvigorating U.S. Public Diplomacy (2003); Peter G. Peterson,Chair; Jennifer Sieg, Project Director

Emergency Responders: Drastically Underfunded, Dangerously Unprepared (2003); Warren B. Rudman,Chair; Richard A. Clarke, Senior Adviser; Jamie F. Metzl, Project Director

Chinese Military Power (2003); Harold Brown, Chair; Joseph W. Prueher, Vice Chair; Adam Segal,Project Director

Iraq: The Day After (2003); Thomas R. Pickering and James R. Schlesinger, Chairs; Eric P. Schwartz,Project Director

Threats to Democracy (2002); Madeleine K. Albright and Bronislaw Geremek, Chairs; Morton H.Halperin, Project Director; Elizabeth Frawley Bagley, Associate Director

America—Still Unprepared, Still in Danger (2002); Gary Hart and Warren B. Rudman, Chairs; StephenFlynn, Project Director

Terrorist Financing (2002); Maurice R. Greenberg, Chair; William F.Wechsler and Lee S.Wolosky,Project Directors

Enhancing U.S. Leadership at the United Nations (2002); David Dreier and Lee H. Hamilton, Chairs;Lee Feinstein and Adrian Karatnycky, Project Directors

Testing North Korea: The Next Stage in U.S. and ROK Policy (2001); Morton I. Abramowitz andJames T. Laney, Chairs; Robert A. Manning, Project Director

The United States and Southeast Asia: A Policy for the New Administration (2001); J. Robert Kerrey,Chair; Robert A. Manning, Project Director

Strategic Energy Policy: Challenges for the 21st Century (2001); Edward L. Morse, Chair; Amy MyersJaffe, Project Director

All publications listed are available on the Council on Foreign Relations website, CFR.org.To order printed copies, contact the Brookings Institution Press: 800-537-5487.

TASK FORCE MEMBERS

The Council sponsors an Independent Task Force when an issue of critical importance to U.S. foreign policy arises, and it seems that a group diverse in backgrounds and perspectives may nonetheless be able to reach a meaningful consensus on policy through private and nonpartisan deliberations. Task Force members are asked to join a consensus signifying that they endorse “the general policy thrust and judgments reached by the group, though not necessarily every fi nding and recommendation.” Individual views and dissents that sharpen differences of analysis and pre-scription are also encouraged. Once formed, Task Forces are independent. Upon reaching a con-clusion, a Task Force issues a report, which the Council publishes and posts on its website. Task Force chairs, directors, and members are solely responsible for the content of their reports.

Charlene Barshefsky and James T. HillChairs

Shannon K. O’NeilProject Director

U.S.-Latin America

Relations:

A New Direction

for a New Reality

INDEPENDENT TASK FORCE REPORT No. 60

U.S.-Latin

Americ

a Relation

s: A New

Direc

tion

for a N

ew Reality

Charlene BarshefskyWilmer Cutler Pickering Hale and Dorr LLP

R. Rand BeersNational Security Network

Alberto R. Coll DePaul University College of Law

Margaret E. CrahanSt. Edward’s University

Jose W. FernandezLatham & Watkins LLP

Francis FukuyamaJohns Hopkins University

Peter HakimInter-American Dialogue

James A. HarmonHarmon & Co.

John G. HeimannFinancial Stability Institute

James T. HillThe JT Hill Group, Inc.

Donna HrinakKraft Foods Inc.

James V. KimseyAmerica Online, Inc.

Jim KolbeGerman Marshall Fund of the United States

Kellie MeimanMcLarty Associates

Shannon K. O’NeilCouncil on Foreign Relations

María OteroACCION International

Arturo C. PorzecanskiAmerican University

David J. RothkopfGarten Rothkopf

Julia E. SweigCouncil on Foreign Relations

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